The Tax Publishers

Companies Act, 2013--CSR

Corporate Social Responsibility--Detailed Analysis

CA. Deepak Harwani

The Learned Author in this write up provides a detailed analysis of the Corporate Social Responsibility provisions provided under the Companies Act, 2013

1. Introduction

Corporate social responsibility can be seen as a commitment, given by company to the society at large, to behave ethically & work for the betterment of the stakeholders by improving the quality of life of the workforce & their families & contribute voluntarily for benefit of the society and a sustainable environment.

2. Importance of Corporate social responsibility for a company

-- Company having CSR framework tend to have good public image

-- It throws positive light on the organisation, which builds positive brand reputation

-- CSR policy builds trustworthiness among employees, which result in talent retention

-- Provides a competitive edge & easier access to raise capital

3. Applicability in India

Section 135 of the Companies Act, 2013 mandates every company whose

-- Turnover was Rs. 1000 crore or more, or

-- Net Worth was Rs. 500 crore or more, or

-- Net Profit was Rs. 5 crore or more

During the immediately preceding financial year shall constitute a Corporate Social Responsibility (CSR) Committee of the Board consisting of 3 or more directors, out of which at least 1 director shall be an independent director. If a company is not required to appoint an independent director under section 149(4), then CSR committee should have at least 2 directors. The Composition of the CSR Committee shall also be disclosed in the Board's report as per section 134(3). Further in case of a foreign company, the balance sheet filed under section 381(1) (b) of the Act, shall contain an Annual Report on CSR.

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