What is the meaning of Corporate Social Responsibility

About corporate social responsibility:

Corporate Social Responsibility simply means telling companies about their social responsibility. Corporate Social Responsibility (CSR) rules are in force in India from April 1, 2014. According to this, for companies whose annual net worth is Rs 500 crore or annual income of 1000 crores or annual profit of 5 crores, then it is necessary to spend on CSR. This expenditure should be at least 2% of the average profit for three years.

As per the CSR Rules, the provisions of CSR are applicable not only to Indian companies but also to the branch of the foreign company in India and the project office of the foreign company.

What is the meaning of Corporate Social Responsibility?

 Companies use natural resources to make a product, promote pollution, and fill their pockets; But various people living in the society have to bear the loss of this bad pollution; Because it is because of the productive activities of these companies that they have to use polluted air and water. But these affected people are not given any kind of direct compensation by the companies. For this reason, it has been made mandatory for companies all over the world including India that they should also give some part of their income for the welfare of those who have caused inconvenience to them. This is called Corporate Social Responsibility (CSR).

What activities can be done in C.S.R?

Under The C.S.R., companies are compelled to participate in those activities which are necessary for the welfare of the people belonging to the backward or marginalized sections of the society.

It includes the following activities:

1. Ending Hunger, Poverty, and Malnutrition
2. Promotion of Education
3. Improving Maternal and Child Health
4. Ensuring Environmental Sustainability
5. Measures for the benefit of the Armed Forces
6. Promotion of Sports Activities
7. Protection of National Heritage
8. Prime Minister's Contribution to National Relief
9. Developing Slum Area
10. Construction of Toilets in Schools

Which companies are eligible for CSR under the Companies Act, 2013?

Eligibility for CSR:

A company fulfilling any of the following criteria during the immediately preceding financial year is required to comply with the CSR provisions read with the Companies (CSR Policy) Rules, 2014 as specified under section 135(1) of the Companies Act, 2013:

1. The net worth of five hundred crore rupees or more, or
2. A turnover of one thousand crore rupees or more, or
3. A net profit of rupees five crores or more.

Whether a holding or subsidiary of a company fulfilling the criteria under section 135(1) has to comply with the provisions of section 135 even if the holding or subsidiary itself does not fulfill the criteria?

No, compliance with CSR requirements is specific to each company. A holding or subsidiary of a company is not required to comply with the CSR provisions unless the holding or subsidiary itself fulfills the eligibility criteria prescribed under section 135(1) mentioned above:

For example:

Company A is covered under the criteria mentioned in section 135(1). Company B is a holding company of Company A. If Company B itself does not satisfy any of the criteria mentioned in section 135(1), then Company B need not comply with the provisions of section 135.

Whether CSR provisions are applicable to a company that has not completed a period of three financial years since its incorporation?

Yes. If the company has not completed three financial years since it's a company registration in India, but it satisfies any of the criteria mentioned in section 135(1), then the CSR provision which includes less than the average net profit made during this period Less than two percent of expenses are included. The immediately preceding financial year(s) are applicable.

What are the functions of the CSR Committee?

Corporate Social Responsibility Committee -

1. Formulate and recommend the CSR policy to the Board;
2. Recommend the amount of expenditure to be incurred on CSR activities;
3. To monitor the CSR policy of the Company from time to time; and
4. To prepare and recommend to the Board an Annual Action Plan pursuant to its CSR Policy, which shall include the items mentioned in Rule 5(2) of the Companies (CSR Policy) Rules, 2014.

For companies covered under section 135(9) of the Act and which do not require a CSR committee, these functions will be done by the Board itself.