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Corporate Social Responsibility

Notified Date of Section: 01/04/2014

1&2[135. (1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during 3[the immediately preceding financial year] shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

4[Provided that where a company is not required to appoint an independent director under sub-section (4) of section 149, it shall have in its Corporate Social Responsibility Committee two or more directors.]

(2) The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.

(3) The Corporate Social Responsibility Committee shall,—
(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company 5[in areas or subject, specified
in  Schedule VII];
(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time to time.

(4) The Board of every company referred to in sub-section (1) shall,—
(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, if any, in such manner as may be prescribed; and
(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.

(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:

Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.

6[Explanation.—For the purposes of this section "net profit" shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of  section 198.]

 

 1.Clarification related to Schedule VII -Dated 18.06.2014.   (Point (iv) has been Omitted - Refer Clarification Dated-17.09.2014)

 2.Clarification related to above Clarification Dated-17.09.2014.

 

Exceptions/Modifications/Adaptations

1. In case of Specified IFSC Public Company - Section 135 shall not apply for a period of five years from the commencement of business of a Specified IFSC public companyNotification Dated 4th January, 2017.

2. In case of Specified IFSC Private Company - Section 135 shall not apply for a period of five years from the commencement of business of a Specified IFSC private companyNotification Dated 4th January, 2017

 

 Amendments 

3. Substituted by the Companies (Amendment) Act, 2017 - Yet to be notified by Central Goverment

In section 135 for sub-section (1),for the words

any financial year

 the following words shall be substituted, namely :-

 the immediately preceding financial year

 4. Inserted by The Companies (Amendment)Act,2017Yet to be notified by Central Goverment

 5.  Substituted by the Companies (Amendment) Act,2017 - Yet to be notified by Central Goverment

 In section 135, for sub-section (3), in clause (a),for the words

 as specified in 1,2 Schedule VII;

 the following words and figures shall be substituted, namely :-

 in areas or subject, specified in  Schedule VII

 6. Substituted by the Companies (Amendment) Act,2017

 In section 135, for sub-section (5), for the Explanation-

 Explanation.—For the purposes of this section “average net profit” shall be calculated in accordance with the provisions of section 198. 

  the following Explanation shall be substituted, namely :-

 Explanation.—For the purposes of this section "net profit" shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of  section 198.