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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Corporate Social Responsibility (CSR)

Dhruv Engineering Pvt Ltd is covered by Section 135 and, after computing two per cent of its average net profits, finds its CSR amount for the year is Rs 42 lakh. Which course is correct?

No committee is required. Where the CSR amount to be spent does not exceed Rs 50 lakh, constitution of the CSR Committee is not applicable and the Board of Directors performs its functions. The spending obligation itself continues.

  1. AIt must still constitute a CSR Committee of three or more directors
  2. BIt need not constitute a CSR Committee; the Board of Directors discharges the Committee's functionsCorrect
  3. CIt is exempt from CSR spending altogether
  4. DIt must appoint a CSR Committee of two directors

Explanation

Where the amount to be spent does not exceed Rs 50 lakh, the requirement to constitute the CSR Committee is not applicable and the Board discharges its functions. The obligation to spend remains. Exemption from spending is wrong because only the committee requirement is relaxed.

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