Section 135. Corporate Social Responsibility
(1) Every company having net worth of five hundred crore rupees or more, or turnover of one thousand crore rupees or more, or net profit of five crore rupees or more during the immediately preceding 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:
Provided that where a company is not required to appoint an independent director, its CSR Committee shall have two or more directors.
(2) The Board’s report shall disclose the composition of the CSR Committee.
(3) The CSR Committee shall formulate and recommend to the Board a CSR Policy indicating activities to be undertaken, recommend the amount of expenditure and monitor the CSR Policy.
(4) The Board shall consider recommendations of the CSR Committee, approve the CSR Policy and disclose its contents in its report and place it on the company’s website, if any.
(5) The Board shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits made during the three immediately preceding financial years, in pursuance of its CSR Policy:
Provided that the company shall give preference to the local area and areas around it where it operates:
Provided further that if the company fails to spend the amount, the Board shall specify the reasons in its report and deal with the unspent amount in accordance with the prescribed rules.
(6) The Central Government may prescribe the functions of the CSR Committee and other requirements.
