Corporate Social Responsibility Committee
Section 135(1) read with Rule 3 of the Companies (Corporate Social Responsibility Policy Rules, 2014, mandates every company having:
(a) Net worth of rupees 5 crores or more, or
(b) Turnover of rupees 1000 crores or more, or
(c) A net profit of rupees 5 crores or more
During any financial year to constitute a Corporate Social Responsibilty (CSR) Committee of the Board.
Section 135 provides that CSR committee shall be constituted with 3 or more directors, out of which atleast one director shall be an independent director.
The CSR Committee shall:
(a) formulate and recommend to the Board, CSR Policy which shall indicate the activities 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)
(c) monitor the CSR policy from time to time.
The Board of every company refers in this Section, shall ensure that Company spends, in every financial year, at least 2% of the average net profits of the company made during the three immediately preceeding financial years, in pursuance of its CSR Policy.
The Board’s Report of the company covered under this Section, shall include an annual report on CSR. Moreover, if the company fails to spend CSR expenses, Board’s report shall specify the reasons for not spending amount.