SECTION 135 CORPORATE SOCIAL RESPONSIBILITY provision short notes for cs companies act 2013
This section seeks to provide that every company having specified net worth or turnover or net profit during any financial year shall constitute the Corporate Social Responsibility Committee of the Board. The composition of the committee shall be included in the Board’s Report. The Committee shall formulate policy including the activities specified in Schedule VII. It further provides that the Board shall ensure that atleast two per cent of average net profits of the company made during three immediately preceding financial years shall be spent on such policy every year. If the company fails to spend such amount the Board shall give in its report the reasons for not spending.
There was no corresponding provision in the Companies Act, 1956 but Ministry of Corporate Affairs, Government of India had brought ‘Corporate Social Responsibility Voluntary Guidelines, 2009’ in December, 2009. According to these guidelines, each business entity should formulate a CSR policy to guide its strategic planning and provide a roadmap for its CSR initiatives, which should be an integral part of overall business policy and aligned with its business goals. The policy should be framed with the participation of various level executives and should be approved by the Board.
The CSR Policy is expected to normally cover following core elements:
a) Care for all stakeholders b) Ethical functioning c) Respect for workers' rights and welfare d) Respect for human rights e) Respect for environment f) Activities for social and inclusive development