Section 135 of Companies Act, 2013 (Act)
requires companies to constitute a Corporate Social Responsibility
Committee (CSR Committee) which is responsible for
formulating a CSR policy for the company. This is mandatory for
companies having net worth of INR 500 crore or more; turnover of
INR 1000 crore or more or having net profit of INR 5 crore or
more.
It is the duty of Board to ensure that the company spends at
least 2% of average net profits made during three immediately
preceding financial years or immediately preceding financial year
where the company has not completed 3 financial years since its
incorporation, in pursuance of its CSR policy. The Draft Rules,
which have not been notified by the MCA as yet, propose further
strengthening the CSR framework.
