PRESENTATION ON CORPORATE SOCIAL RESPONSIBILITY BY- Aparna.R

Presentation Outline CSR Definition CSR as per Companies Act,2013 CSR Committee Roles and Responsibilities of CSR Committee Role of Board of Directors CSR activities CSR Policy Net Profit Calculation Schedule VII Relevant Circulars & Notifications

Corporate Social Responsibility Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large - Lord Holme and Richard Watts   Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them. It goes beyond philanthropy and compliance and addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm. - Harvard University

Section 135 Companies mandatorily should constitute CSR committee: All Listed Companies Unlisted Companies having net worth of Rs.500 crore or more or Turnover of Rs.1000 crore or more Net profit of Rs.5 crore or more.

CSR Committee CSR committee shall comprise of three or more Directors. At least one director is to be an independent Director. Board’s Report shall disclose the constitution of CSR committee. CSR Committee will Formulate CSR policy and recommend to board indicating the activities to be undertaken as specified in schedule VII. Recommend the amount of expenditure to be incurred. Monitor CSR Policy from time to time.

Roles and responsibilities of CSR Committee Reviewing and making recommendations regarding proposals that relate to matters of corporate social responsibility and are submitted for inclusion in the Company’s proxy statement for its annual meeting of stockholders. Reviewing social, political, economic and environmental trends that may have a significant impact on the Company’s business activities and performances. Reviewing and evaluating management’s goals, initiatives and practices for Social Responsibility and recommending goals, initiatives and practices for Social Responsibility to the Board of Directors.

Reviewing and assessing Company policies and practices with respect to significant issues of corporate social responsibility, including, without limitation, compliance with the Company’s Code of Conduct, product safety, environmental health and compliance, transparency, sustainability, public policy matters, corporate citizenship and charitable contributions. Reviewing significant lawsuits, investigations by governmental entities and other significant legal matters involving the Company or one of its affiliates that affect or could affect the Company’s performance, business activities, or reputation as a global corporate citizen

Providing oversight over operations and programs regarding strategic philanthropy and employee community involvement; public policy and advocacy, including lobbying and political contributions; environmental management; corporate social responsibility of suppliers; human rights, as reflected in the Corporation’s policies and actions toward employees, suppliers, clients and communities.

Role of Board Of Directors Board of Directors will Approve CSR policy Ensure implementation of CSR policy Disclose the contents of CSR policy in the Board Report. Place the same on the website of the company. Ensure CSR spending amounting at least 2% of the average net profit of the preceding three financial years. Board’s Report shall specify the reasons for not spending the specified amount

CSR activities The board of the company may decide to undertake its CSR activities approved by the CSR committee, through the registered trust or a registered society or a company established by the company or its holding or subsidiary or associate company under Section 8 of the Act or otherwise. Provided that- 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 monitoring and reporting mechanism.

A company may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR committees of respective companies are in a position to report separately on such projects or programs in accordance with these rules. Subject to provisions of Sub-Section (5) of Section 135 of the Act, the CSR projects or programs or activities undertaken in India only shall amount to CSR expenditure. The CSR projects or programs or activities that the benefit only the employees of the Company and their families shall not be considered as CSR activities in accordance with Section 135 of the act. Contribution of any amount directly or indirectly to any political party under section 182 shall not be considered as CSR activity.

CSR policy A list of CSR projects or programs which a company plans to undertake falling within the purview of the Schedule VII of the Act, specifying modalities of execution of such project or programs and implementation schedules for the same. Monitoring process of such projects or programs Provided that the CSR activities does not include the activities undertaken in pursuance of normal course of business of a company. Provided further that the Board of Directors shall ensure that the activities included by a company in its corporate social Responsibility policy are related to the activities included in Schedule VII of the Act. The CSR policy of the Company shall specify that the surplus arising out of the CSR projects or activities shall not form part of the business profit of a company.

Net Profit Calculation Net profit means net profit of the Company as per its financial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following: Any profit arising from any overseas branch or branches of the Company, whether operated as a separate company or otherwise; and Any dividend received from other companies in India, Which are covered under and complying with the provisions of Section 135 of the act; Provided that net profit in respect of a financial year for which the relevant financial statements were prepared in accordance with the provisions of Companies Act,1956 shall not be required to be recalculated in accordance with the provisions of the act.

Schedule VII Eradicating hunger & poverty. Promotion of education. Promoting gender equality and empowering women. Reducing child mortality and improving maternal health. Combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases. Ensuring environment sustainability. Employment enhancing vocational skills. Social business projects. Contributions to Prime Minister Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Caste and Schedule Tribe such other matters as may be prescribed. Rural Development Projects. Slum area development.

Circulars, Notices Circular:18th June,2014 Clarifications with regard to provisions of Corporate Social Responsibility under Section 135 of Companies Act,2013 Notification:24th October,2014 Under Schedule VII, under item (i)after words and sanitation, the words’ including contribution to the Swach Bharat Kosh set up by the Central Government for the promotion of Sanitation’. In item (iv) after the words, and water, the words ‘including contribution to the Clean Ganga Fund set up by the Central Government for rejuvenation of river Ganga’ shall be inserted. It will be read as: i)Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation including contribution to Swach Bharat Kosh set up by the Central Government for the promotion of Sanitation and making available safe drinking water. iv)Ensuring environmental sustainability ,ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water including contribution to the Clean Ganga Fund set up by the Central Government for rejuvenation of river Ganga

Circular: Dated 12th September,2014 Under CSR rules,2014,Expenditure also includes the Expenditure on administrative overheads. Circular : Dated:17th September,2014 Clarification with regard to provisions of CSR under Section 135 of the Companies Act,2013 Notification:19th January,2015 Regarding few changes in a sentence under CSR rules. Notification:6th August,2014 Under Schedule VII,after item (x),a new item was inserted (xi)Slum area development.

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