CORPORATE SOCIAL RESPONSIBILITY

CS PRAJOT TUNGARE

Master Class on Company LawPune Chapter of WIRC of ICSI

Saturday, 30th 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

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PURPOSEObjectives of Corporate Governance

Corporate Responsibility towards Stakeholders A. EconomicB. LegalC. EthicalD. Philanthropic

Sustainable Development

Promote Welfare Initiatives

Not A Charity ……… A ResponsibilityCS PRAJOT TUNGARE

APPLICABILITYSection 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.

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CSR COMMITTEEConstitution 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.

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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

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FUNCTIONS OF BOARDBoard 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

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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

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CSR ACTIVITIESAs per CSR PolicyCSR Projects or CSR ProgramsCSR Activities to be undertaken exclusively in IndiaActivities of company under “normal course of

business” are excludedActivities benefiting only employees are not eligibleActivities implemented :

either personally; or jointly with other companies; or thru implementing agencies [trust, society, company]

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CSR EXPENDITURE2% of average net profits of company for

immediately three (3) preceding financial years

Contribution to CorpusBuilding 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

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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

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ANNUAL REPORT ON CSR ACTIVITIESAnnual 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

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QUESTIONS

THANK YOU !

CS Prajot TungarePrajot Tungare & Associates

Company Secretaries529/1, 2nd Floor, Shraddha Chambers,

Near Ramakrishna Math, Sinhagad Road,Opp. Dandekar Bridge, Pune – 411 030

Mobile: 94220 80704; Phone: 020-2433 6490/91Email: prajot@prajottungarecs.com

Url: www.prajottungarecs.com