THE ESSENTIAL GUIDE: CORPORATE SOCIAL RESPONSIBILITY

20 MAY, 2015

APPLIES TO:

Public Limited Companies

Private Limited Companies

Branches of Foreign Companies

APPLICABILITY:

Net Worth: Rs.5,000 million

Turnover: Rs.10,000 million

Net Profit: Rs.50 million

WHAT IS CSR?

CSR IS NOT CHARITY. CSR IS NOT DONATION.

It is: An integral part of business

A partnership approach in creating long-term positive impact to business stakeholders

A component of triple bottom line report

MANDATORY CSR OBLIGATIONS

Constitute a CSR committee of the board

Formulate a CSR policy based on the CSR committee’s recommendation

Undertake activities include in CSR policy

Spend 2% of the average net profits on CSR

Disclosures in the board’s report

CSR COMMITTEE

Listed Public Ltd. Co.: Committee of 2 or more directors + at least 1 independent director

Other Co.: Committee can be w/o independent director

Private Co.: Committee with 2 directors

Foreign Co.: 2 directors; 1 should be resident in India with authority to receive notices on behalf of co. + 1 other person nominated by foreign co.

WHAT ARE THE RESPONSIBILITIES OF THE CSR COMMITEE?

Formulate the CSR policy of the company

Recommend the CSR policy to the board

Indicate the CSR activities to be undertaken

Recommend the amount of CSR expenditure to be incurred

Monitor the CSR policy

WHAT ARE THE BOARD’S RESPONSIBILITIES?

State in annual report the composition of the CSR committee

Approve the CSR policy as recommended by the CSR committee

Disclose the CSR policy in annual report

Disclose the CSR policy on the company’s website

Ensure that the activities as included in the CSR policy are undertaken

CSR ACTIVITIES

1. Eradication of hunger + poverty

2. Promoting education

3. Promoting gender equality

4. Ensuring environmental sustainability

5. Protecting national heritage

6. Benefit armed forces dependants

7. Sports activities 8. PM relief fund 9. Technology incubators

10. Rural development 11. Slum area development

MANDATORY CSR SPENDS

2% of the past 3 years average net profits

Preference to be given to local areas. Spend to be in India only.

Reasons for not spending to be included in the board’s report

CSR spends through other agencies who have established track record of three years (CSR spend is not tax deductible)

CONSIDERATIONS TO MAKE

CSR Corpus to include: 2% of the average net profits Any income arising from CSR activities Surplus arising out of CSR activities

Excludes activities in normal course

Excludes expenditure that benefit only the employees or their families

Excludes political contributions

Pooling of resources permitted

CSR activities through a trust, society, foundation allowed

Expenditure incurred to build capabilities not to exceed 5% of CSR expenditure

ABOUTVardān means–‘giver of good fortune’

Vardān specializes in end to end consulting in the social responsibility space

Offering unique services in the domain extending from vision to reality

Promoted by accounting professionals with global exposure

Passion to make a difference in the advisory sphere

Exercise of visioning–followed by implementation and culminating in its measurement

Challenging status quo