CORPORATE SOCIAL RESPONSIBILITY As the name suggests it denotes the responsibility of the corporate entities towards the society in which it operates its business. As the business uses resources of the society it becomes obligatory for the business to return the society for the resources it has used. Hence, in Companies Act, 2013 Section 135 has been added for Corporate Social Responsibility and Rules are framed MCA for smooth implementation.

S ECTION 135 READ WITH C OMPANIES (C ORPORATE S OCIAL R ESPONSIBILITY ) R ULES, 2014 The rules have become applicable from 1 st April 2014.

A PPLICABILITY Companies having a) Turnover of Rs. 100 Thousand crore or more; or b) Net Worth of Rs. 500 crore or more; or c) Net Profit of Rs. 5 crore or more, in any financial year. SHALL constitute a CORPORATE SOCIAL RESPONSIBILITY COMMITTEE. Every Company Including its:- a) Holding or subsidiary company, and b) Foreign Company as defined in the act, including its project office or branch office in India, which fulfils the criterion as given in Section 135(1). Section 135(1)As per Rule 3

COMPOSITION OF COMMITTEE 3 or more directors, out of which at least 1 director shall be an independent director. An unlisted public company or a private company covered under sub- section ( I ) of section 135 which is not required to appoint an independent director, shall have its CSR Committee without such director. A private company having only two directors on its Board shall constitute its CSR Committee with two such directors. A foreign company covered under these rules, the CSR Committee shall comprise of at least two persons of which one person shall be as specified under clause (d) of sub-section (1) of section 180 of the Act and another person shall be nominated by the foreign company. As per Section 135(1)As per Rule 5

R ULE 6:- CSR P OLICY  CSR Policy to include the following, namely - a) a list of CSR projects or programs which company plans to undertake falling within the purview of the Schedule VII of the Act, (b) monitoring process of such projects or programs:  CSR Policy shall specify that the surplus arising out of the CSR projects or programs or activities shall not form part of the business profit of a company.

ACTIVITIES OF CSR COMMITTEE formulate and recommend to the Board, a Corporate Social Responsibility Policy indicating the activities to be undertaken by the company as specified in Schedule VII; recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and monitor the Corporate Social Responsibility Policy of the company from time to time. CSR activities to be undertaken according to the Policy framed by Committee. Can be undertaken through:- A) a registered trust; or B) a registered society; or C) or a company established by the company or its holding or subsidiary or associate company under section 8 of the Act. Section 135(3) Rule 4

C ONTINUED …………… R ULE 4 Provided that- (i) if such trust, society or company is not established by the company or its holding or subsidiary or associate company, it shall have an established track record of three years in undertaking similar programs or projects; (ii) the company has specified the project or programs to be undertaken through these entities, the modalities of utilization of funds on such projects and programs and the monitoring and reporting mechanism  A company may also collaborate with other companies to undertake CSR activities in such a manner that both the companies can report separately about the activities.  Companies may build CSR capacities of their own personnel as well as those of their Implementing agencies through Institutions with established track records of at least three financial years but such expenditure shall not exceed five percent of total CSR expenditure of the company in one financial year.

ACTIVITIES NOT CONSTITUING CSR ACTIVITIES Activities undertaken in pursuance of its normal course of business. Activities that benefit only the employees of the company and their Families. Contribution of any amount directly or indirectly to any political party under section 182 of the Act.

CSR E XPENDITURE 2% of the average net profits of the company made during the three immediately preceding financial years. Preference will be given to the local area and areas around it where it operates. If the company fails to spend such amount, the Board shall, specify the reasons for not spending the amount in the Board Report. CSR expenditure shall include all expenditure including contribution to corpus, the projects or programs relating to CSR activities approved by the Board on the recommendation of its CSR Committee, but does not include any expenditure on items not in conformity or not in line with activities which fall within the purview of Schedule VII of the Act. Sec 135(5)Rule 7

BOARD’S RESPONSIBILITY Section 135(4) The Board of every company shall,— approve the Corporate Social Responsibility Policy and disclose contents of such Policy in its report and also place it on the company's website, if any; and ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company. Rule 8:- CSR Reporting Companies whose financial year commences on or after 1 st day of April 2014, shall include in their Board’s Report an Annual Report on CSR. In case of a Foreign Company, the Balance Sheet filed u/s 381(1)(b) shall contain an annexure on CSR Reporting. Rule 9:- Displaying CSR Activities Display the Corporate Responsibility Policy on its web site, if any. Sec 135(4)Rule 8 & 9

CONCLUSION Companies Act, 2013 has made an attempt to improve, develop and eradicate the problems faced by the society by bringing certain specified companies in the category to follow Corporate Social Responsibility. Hence, it becomes the responsibility of the Companies to follow these practice in true letter and spirit.