G.S.R______(E).In exercise of the powers conferred under section 135 and sub-sections(1) and (2) of section 469 of the Companies Act,2013(18 of the 2013),the Central Goverment hereby makes the following rules,namely :-
(1) short title and commencement.
These rules may be called the companies(Corporate Social Responsibility Policy)Rules,2014.
The Shall come into force on the 1st day of April,2014.
In these rules,unless the Context otherwise requires,
(a) "Act" means the companies Act,2013;
(b) "Annexure" means annexure appended to these rules;
(c) "Corporate Social Responsibility(CSR)means and includes but it is not limited to :-
- (i)Projects or programs relating to activities Specified in Schedule VII of the Act; or
- (i)Projects or programs relating to activities undertaken by the board of directors of a company(Board)in pursuance of recommendations of the CSR committee of the board as per declared CSR policy of the company subject to the condition that such policy will cover subjects enumerated in Schedule VII of the Act; or.
(e) "CSR Policy" relates to the activites to be undertaken by the company as specified in Schedule VII to the Act and the expenditure thereon, excluding activities undertaken in pursuance of normal course of business of a company;
(f) "Net Profit" means the net profit of a company as per its financial statement prepared in accordance with the applicable provisions of the Act,but shall not include the following namely:-
- (i)any profit arising from any overseas branch or branches of the company,whether operated as a seperate company or otherwise;and
- (ii)any dividend received from others companies in India, Which are covered under and complying with the provisions of section 135 of the Act:
Provided that net profit in respect of a financial year for which relevant financial statement were prepared that provisions of the companies Act,1956,(1 of 1956) shall not be required to be re-calculated in accordance with the provisions of the Act
- Provided further that incase of a foreign company covered under these rules,net profit means the net profit of such company as per profit and loss account prepared in terms of clause(a) of sub-section(1)section 381 read with section 198 of the Act.
(2)Word and Expressions and not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act.
(3) Corporate Social Responsibility
(1) Every company including its holding or subsidiary,and a foreign company defined under clause(42)of section 2 of the Act having its branch office or project office in India,which fulfills the criteria specied in sub-section(1)of section 135 of the shall comply with the provisions of section 135 of the Act these rules.
Provided that net worth,turnover or net profit of a foreign company of the Act shall be computed in accordance with balance sheet and profit and loss account of such company prepared in accordance with the provisions of clause(a)of sub-section(1) of section 381 and section 198 of the Act
(2) Every Company which ceases to be a company covered under sub-section(1)of section 135 of the Act for the three consecutive financial years shall not be required to.
- constitute a CSR committee;and
- Comply with the provisions contained in sub-section(2) to (5) of the said section till such time it meets the critera specified in sub-section(1)of section 135.
(4) CSR ACTIVITIES
(1)The CSR Activites shall be undertaken by the company,as per its stated CSR policy, as projects or programs or sctivities(either new or ongoing),excluding activities undertaken in pursuance of its normal course of business.
(2)The Board of the comapany may decide to undertake its CSR activities approved by the CSR committee,through a registered trust or a registered society or a company established by the company or its holding or subsidiary or associate company undersection 8 of the Act or otherwise;
- If such trust,society or company is not established by the comapny or its holding or subsidiary or associate company, it shall have an established track record of three years in undertaking similar programs or projects.
- The company has specified the projects or programs to be undertaken through these entities,the modelities of utilization of funds on such projects or programs under the monitoring and reporting mechanism
(3) A Company may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR committees of respective companies are in a position to report seperately on such projects or programs in accordance with these rules.
(4) Subject to provisions of sub-section(5) of section 135 of the Act, the CSR Projects or programs or activities undertaken in India only shall amount to CSR Expenditure.
(5) The CSR projects or programs or activities that benefit only the employees of the company and their families shall not be considered as CSR activities in accordance with section 135 of the Act.
(6) companies may build CSR capacities of their own personnel as well as those of their implementing agencies through institutions with established track records of at least three financial years but such expenditure shall not exceed five percent of total CSR expenditure of the company in one financial year.
(7) Contribution of any amount directly or indirectly to any political party under section 182 of the Act,shall not be considered as CSR activity
(5) CSR Committees
- The Companies mentioned in the rule 3 shall constitute CSR Committees as undertaken
- An unlisted public company or private company covered under sub-section(1) of section 135 which is not required to appoint an independent director pursuance to sub-section(4) of section 149 of the Act, shall have its CSR Committees without director
-   A private company having only two directors on its Board shall constitute its CSR Committee with two such directors
-   With respect to a foreign company covered under these rules,the CSR Committee shall comprise of at least two persons of which one person shall be as specified under clause(d)of sub-section(1)of section 380 of the Act and another person shall be nominated by the foreign company
- The CSR Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects or programs or activities undertaken by the company.
(6) CSR Policy
- The CSR Policy of the company shall,inter-alia,include the following namely:-
- A list of CSR projects which a company plans to undertake to falling within the preview of the schedule VII of the Act,specifying modelities of the excution of such project or programs and implementation schedule for the same;and
- monitoring process of such projects or programs
- That the CSR Activities does not include the activities undertaken in pursuance of normal course of business of a company
- Provided further that the Board of Directors shall ensure that activities included by a company in its CSR policy are related to the activities included in Schedule VII of the Act.
- The CSR policy of the company shall specify that the surplus arising out of the CSR projects or programs or activities shall not form part of the business profit of a company
(7) CSR Expenditure
- CSR Expenditure shall include all expenditure including contribution to corpus for projects or programs relating to CSR activities approved by the Board on the recommendation of its CSR Committee,but doesnot include any expenditure on an item not in conformity or not in line with activities which fall within purview of schedule VII of the Act.
(8) CSR Reporting
- The Board Report of a company covered under these rules pertaining to a financial year commencing on or after the 1st day of April,2014 shall include an annual report on CSR containing particulars specified in Annexure.
- In case of foreign company,the balance sheet filled under sub-clause
- Of sub-section(1)of section 381 contain an Annexure regarding report on CSR
(9) Display of CSR activities on its website: