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Section 135 of the Companies Act 2013: Corporate Social Responsibility(CSR)

SECTION-135 (Corporate Social Responsibility) under CHAPTER-IX (Accounts of Companies) of the Companies Act, 2013

(1) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

(2) The Board's report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.

(3) The Corporate Social Responsibility Committee shall,—
(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII;
(b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
(c) monitor the Corporate Social Responsibility Policy of the company from time to time.
(4) The Board of every company referred to in sub-section (1) shall,—
(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, if any, in such manner as may be prescribed; and
(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.
(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:

Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.

Explanation.—For the purposes of this section “average net profit” shall be calculated in accordance with the provisions of section 198.





Extra Notes for Readers

(1) The Companies Act, 2013 received the assent of the President on the 29th August, 2013 (Published in the Gazette of India, Extraordinary, Part II - Section 1 by Ministry of Law and Justice, Legislative Department on 30th August, 2013) - link


(2) Section 135 of the Companies Act 2013 was notified by MCA Notification S.O. 582(E) dated 27th February, 2014 (w.e.f. 1st April 2014) - link

(3) Relevant rule(s) of the Companies (Accounts) Rules, 2014 - link
  • Rule 9 - Disclosures about CSR Policy
[Also check amendments, if any, to the Companies (Accounts) Rules, 2014]

(4) Specified IFSC Private Company - MCA Notification G.S.R. 09(E) dated 4th January, 2017 - link 

Serial
Number
Provisions of the Companies Act, 2013 (18 of 2013)
Exceptions/Modifications/Adaptations
22.
Section 135
Shall not apply for a period of five years from the commencement of business of a Specified IFSC private company.

(5) Specified IFSC Public Company - MCA Notification G.S.R. 08(E) dated 4th January, 2017 - link

Serial
Number
Provisions of the Companies Act, 2013 (18 of 2013)
Exceptions/Modifications/Adaptations
31.
Section 135
Shall not apply for a period of five years from the commencement of business of a Specified IFSC public company.

(6) MCA CircularsClarifications/FAQs on Section 135-CSR


  • (Clarification) MCA General Circular No. 21/2014 Dated: 18th June, 2014 - link
  • (Clarification) MCA General Circular No. 36/2014 Dated: 17th September, 2014 - link
  • (FAQs) MCA General Circular No. 01/2016 Dated: 12th January, 2016 - link
  • (Clarification) MCA General Circular No. 05/2016 Dated: 16th May, 2016 - link

 




This page was last updated on 21st March, 2017.

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