CSR Committee Meetings: Corporate Social Responsibility Committee, also known as CSR, is a ministry of the government under the Board of the Company following the Companies Act of 2013. It was formed to establish a strong foundation, provide social integration, and direct the company to develop welfare initiatives.
- Role of the CSR Committee
- Applicability for CSR Committee
- CSR Committee Policy
- CSR Committee Time Limit
- Number of Committee members allowed
- Role of Board in the CSR Committee
- Importance of the CSR Committee
Role of CSR Committee
The CSR must do the following:
- Outline the activities that the company must undertake as per Schedule VII.
- Recommend expenditure yet to be incurred on the CSR activities.
- Regulate the CSR policy of the company from time to time.
- Must establish a clear controlling mechanism for implementing CSR projects or activities as undertaken by the company.
Applicability for CSR Committee
Companies with financial conditions as mentioned below are applicable for CSR:
- Companies with a total worth equal to or higher than Rs. 500 crores.
- Companies with turnover equal to or higher than Rs. 1000 crores.
- Companies with a net profit equal to or higher than Rs. 5 crores at a given financial year.
The provisions of CSR apply to the types of companies as mentioned below:
- Every company enrolled under the Companies Act of 2013.
- Their holding company, as per the postulates of CSR.
- Their subsidiary company is mentioned in the postulates published by the CSR.
- Any Foreign company registered under the Companies Act of 2013.
CSR Committee Policy
The policies under the Committee:
- The company’s website should contain CSR Policies as prescribed by the Board.
- The company must undertake the activities mentioned in the policy.
- The company may join other companies to undertake projects or CSR activities and report individually on such projects.
- The CSR policy must monitor these projects.
CSR Committee Time Limit
No such time limit has been prescribed for companies under the CSR Committee. However, once the provision of Section 135 of the Companies Act becomes applicable, the Committee must be constituted in the First meeting of the Board of Directors right after the requisite clauses have been applied.
Number of Committee Members Allowed
In India, a CSR Committee must have two or more directors. Those companies listed on a business should have three directors (inclusive of one independent director), and Foreign Companies/ MNCs should have at least two members (including one Indian member who can make decisions for the company regarding the issue of notices and improvised documentation).
Role of Board in CSR Committee
The Board of Directors in the CSR Committee plays many vital roles. These roles are discussed below in detail:
- The Board should ensure only those activities undertaken by companies that are mentioned in the policy.
- The Board of Directors must make sure that the company spends a minimum of 2% of the average total profits made through three past financial years, per annum.
- If any company has not completed three financial years from the day of incorporation, average net profits should be calculated based on the number of completed financial years.
The Report shall disclose:
- Composition of the CSR Committee
- Contents of the Policy
- As per CSR Policy, if a company does not meet 2% CSR, the reasons for the unspent amount, and transfer details of unspent amount concerning an ongoing project to any specified fund (transfer under a period of six months from the ending of the financial year).
Importance of CSR Committee
- CSR is a vast term used to justify the efforts of any company to modify society in a positive way.
- CSR uplifts the public image by broadcasting the efforts towards a sounder society and enhance their chance of becoming beneficial in the consumer’s eyes.
- CSR increases media coverage since media visibility shines a positive light on the organization of a successful company.
- CSR enhances the brand value of the company by building an ethically strong relationship with the customers.
- CSR assists companies in standing out from the competition when companies are included in any community.