All About Section 135 Corporate Social Responsibility (CSR)


All About Section 135 Corporate Social Responsibility (CSR)

1)   Every company having net worth of rupees five hundred crore or more,

(2)    or  turnover of rupees one thousand crore or more

(3)   or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the

Board consisting of three or more directors, out of which at least one director shall be an independent director.

(2) The Board’s report under sub-section (3) of section 134 shall disclose the composition of the Corporate Social Responsibility Committee.

(3) The Corporate Social Responsibility Committee shall,—

(a) formulate and recommend to the Board, a Corporate Social Responsibility

Policy which shall indicate the activities to be undertaken by the company as

specified in Schedule VII;

(b) recommend the amount of expenditure to be incurred on the activities referred to in clause

(c) monitor the Corporate Social Responsibility Policy of the company from time to time.

(4) The Board of every company referred to in sub-section (1) shall,—

(a) after taking into account the recommendations made by the Corporate Social

Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company’s website, if any, in such manner as may be prescribed; and

(b) ensure that the activities as are included in Corporate Social Responsibility

Policy of the company are undertaken by the company.

5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy:

Provided that the company shall give preference to the local area and areas around it

where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount.

Explanation.—For the purposes of this section “average net profit” shall be calculated in accordance with the provisions of section 198.

Corporate Social Responsibility (CSR) Activities

The following activities can be performed by a company to accomplish its CSR obligations:

  • Eradicating extreme hunger and poverty
  • Promotion of education
  • Promoting gender equality and empowering women
  • Reducing child mortality
  • Improving maternal health
  • Combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria and other diseases
  • Ensuring environmental sustainability,
  • Employment enhancing vocational skills, social business projects
  • Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development, and
  • Relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women and such other matters as may be prescribed.

Importance of Corporate Social Responsibility (CSR)

The term corporate social responsibility gives a chance to all the employees of an organization to contribute towards the society, environment, country and so on. We all live for ourselves but trust me living for others and doing something for them is a different feeling altogether. Bringing a smile to people’s life just because your organization has pledged to educate the poor children of a particular village not only gives a sense of inner satisfaction but also pride and contentment. One should never forget the importance of society and environment in our lives. It is indeed high time when we also start thinking about people around us who are less privileged and fortunate than us. Corporate social responsibility gives an opportunity to organizations to work towards the betterment of the society and make it a better place to live.

Corporate social responsibility goes a long way in creating a positive word of mouth for the organization on the whole. Doing something for your society, stake holders, customers would not only take your business to a higher level but also ensure long term growth and success. Corporate social responsibility plays a crucial role in making your brand popular not only among your competitors but also media, other organizations and most importantly people who are your direct customers. People develop a positive feeling for a brand which takes the initiative of educating poor children, planting more trees for a greener environment, bringing electricity to a village, providing employment to people and so on. You really do not have to invest much in corporate social responsibility activities. Do not undertake CSR activities only to gain publicity but because you believe in the cause. There are many organizations which tap remote villages, some of which are even unheard as an initiative of corporate social responsibility.

Corporate social responsibility also gives employees a feeling of unparalleled happiness. Employees take pride in educating poor people or children who cannot afford to go to regular schools and receive formal education. CSR activities strengthen the bond among employees. People develop a habit of working together as a single unit to help others. Infact they start enjoying work together and also become good friends in due course of time. They also develop a sense of loyalty and attachment towards their organization which is at least thinking for the society. Who does not like to work with an organization where management is kind enough to take out time for the society and contribute in their own small way? Corporate social responsibility also goes a long way in building a positive image of the brand. your brand becomes a “common man’s brand”. People start believing in the brand and nothing can help you more than your customers trusting you and your brand. Positive word of mouth eventually helps to generate more revenues for the organization.

In today’s scenario of cut throat competition, everyone is so occupied in chasing targets and handling the pressure at workplace that we actually forget that there is a world around us as well. Have you ever thought about those who can’t even afford proper meal twice a day? If you can take some time out of your busy schedule, please try to visit a village once. You would be surprised to see how people manage their lives there. Corporate social responsibility in a way also plays a crucial role in the progress of the society, which would at the end of the day benefit us only.