Page 44 - Banking Finance September 2019

ARTICLE

Now as per the section 135 of the companies Act 2013 activities are included in the corporate social
Corporate social responsibility policy is mandatory for all responsibility policy as per the company ACT.
those companies who come under the criteria mentioned e. The Board of every company should ensure that the
under subsection 1 under section 135 of company act 2013. company shall spend at least 2 percent of the average
net profits of the company made during the three
Under sec 135 of companies act immediately preceding financial years in pursuance of
a. Every company having net worth of Rs.500 crore or its corporate social responsibility policy .The company
more, or Turnover of Rs 1000 crore or more or profit of shall give preference to the local area and areas around
Rs 5 crore or more during any financial year shall have it where it operates for spending the amount earmarked
to constitute a corporate social responsibility committee for CSR activities.
of the Board consisting of three or more directors of
which at least one director is an independent director. Functions of the CSR committee:
b. The Board's report under sub-section(3)of section 134 Y The CSR committee formulates the CSR policy,
and disclose the composition of the corporate social
Y They recommend CSR activities to be implemented by
responsibility committee
the company,
c. The corporate social responsibility committee shall
i) Formulate the guidelines in line with section 135 Y They set forth budget in detail how company will
and recommend the board ,a corporate social implement the project and establish transparency.
responsibility policy which shall indicate the
activities to be undertaken by the company as Disclosures:
specified in schedule VII If the company fails to spend such amount, the Board has
to furnish its report made under clause (o) of sub-section
ii) CSR committee also recommend the amount of
expenditure to be incurred on the activities 134, specify the reasons for not spending the amount. Under
section 8 of the CSR rules it is mandatory for a company
iii) CSR committee also monitor the corporate social after 1st April 2014. The Company has to furnish in its
responsibility policy of the company from time to Board's report an annual report on CSR as prescribed below
time
Y The company CSR policy
d. i ) The Board of the company after taking into account Y Proposed programs to be undertaken by the company
the instructions mentioned in sub section 1 of sec
135 make the corporate social responsibility Y The composition of the CSR committee
committee and approve the CSR policy for the Y Average net profit of the company for the last three
company and disclose contents of such policy in its financial years
report and also place it on the company's website Y CSR expenditure i.e.2% of the average net profit of the
ii) The Board of the company also ensures that the last three financial year as per financial statements
Y During calculation of net profits of the companies
exclude following things :Any profit arising from any
overseas branch or branches of the company or any
dividend received from other companies in India which
are covered under and complying with the provisions
of the section 135 of the ACT
Y The surplus arises out of the CSR activity will not be part
of business profits of the company

Activities under CSR:
CSR responsibility of the company is a commitment to
support or to take initiatives to improve the lives of weaker

44 | 2019 | SEPTEMBER | BANKING FINANCE