CS PRAJOT TUNGARE Master Class on Company Law Pune Chapter of WIRC of ICSI Saturday, 30 th August 2014

MEANING Corporate Social Responsibility [CSR] is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of workforce and their families as well as the local community and society as well. - World Business Council for Sustainable Development CS PRAJOT TUNGARE

PURPOSE Objectives of Corporate Governance Corporate Responsibility towards Stakeholders A. Economic B. Legal C. Ethical D. Philanthropic Sustainable Development Promote Welfare Initiatives Not A Charity ……… A Responsibility CS PRAJOT TUNGARE

APPLICABILITY Section 135 of the Companies Act, 2013: Every Company having:- Net Worth of Rs.500 crore or more; Or Turnover of Rs.1,000 crore or more; Or Net Profit of Rs.5 crore or more; during any financial year, shall, constitute a CSR Committee of the Board. Company includes its holding or subsidiary and a Foreign Company having its branch office or project office in India. Company which ceases to meet the criteria under section 135(1) for three (3) consecutive financial years, shall not constitute a CSR Committee and need not comply with the provisions of section 135, until it again meets the said criteria. CS PRAJOT TUNGARE

CSR COMMITTEE Constitution of CSR Committee of the Board :- Three (3) or more Directors, with one (1) Independent Director [ID]; Company not required to appoint an ID, need not have an ID in the CSR Committee; Private Company having only two (2) Directors on Board shall have CSR Committee with two (2) such Directors. Foreign Company shall constitute CSR Committee with two (2) persons comprising the following A. One (1) person specified in Section 380(1)(d); and B. Any other person nominated by the said Foreign Company. CS PRAJOT TUNGARE

FUNCTIONS OF CSR COMMITTEE Formulate CSR Policy Recommend the CSR Policy to the Board Recommend amount of expenditure to be incurred on CSR Activities Monitor CSR Policy CS PRAJOT TUNGARE

FUNCTIONS OF BOARD Board to Approve the CSR Policy Disclose content of CSR Policy in Board Report Ensure that the CSR Activities are Undertaken Ensure spending on CSR Activities Report under section 134(3)(o) the reasons for not spending, if any CS PRAJOT TUNGARE

CSR POLICY CSR Projects / CSR Programs as per Schedule VII Specify modalities of Execution of the CSR Projects / CSR Programs Provide Implementation Schedule Define Monitoring Process CS PRAJOT TUNGARE

CSR ACTIVITIES As per CSR Policy CSR Projects or CSR Programs CSR Activities to be undertaken exclusively in India Activities of company under “normal course of business” are excluded Activities benefiting only employees are not eligible Activities implemented : either personally; or jointly with other companies; or thru implementing agencies [trust, society, company] CS PRAJOT TUNGARE

CSR EXPENDITURE 2% of average net profits of company for immediately three (3) preceding financial years Contribution to Corpus Building CSR capacities of Employees / Agencies – not to exceed 5% of total CSR Expenditure in one (1) financial year Salaries to CSR Staff / Volunteers Expenditure by Foreign Holding Company Contribution to Political Parties is not a CSR CS PRAJOT TUNGARE

CSR REPORTING Board of Directors Report shall include Annual Report on CSR Foreign Company shall include CSR Report as annexure to Balance Sheet filed under section 381(1)(a) Failure to spend CSR Expenditure shall be reported by Board with reasons CS PRAJOT TUNGARE

ANNUAL REPORT ON CSR ACTIVITIES Annual Report to be included in the Board Report & include: Outline of CSR Policy Overview of CSR Projects and Programs Composition of CSR Committee Average Net Profit for preceding three (3) financial years Prescribed CSR Expenditure Details of CSR Spent / Unspent Project; Sector; Location; Budget vis-à-vis Spending; Implementing Agency. Responsibility Statement of CSR Committee CS PRAJOT TUNGARE

CS Prajot Tungare Prajot Tungare & Associates Company Secretaries 529/1, 2 nd Floor, Shraddha Chambers, Near Ramakrishna Math, Sinhagad Road, Opp. Dandekar Bridge, Pune – Mobile: ; Phone: /91 Url: