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CS Professional · CSR and Social Governance · Guidelines on CSR

Ganga Foods Ltd operates a plant in a district of Madhya Pradesh. While planning its CSR spending, the Board asks what the Act says about where the money should be spent. Which is correct?

The company must give preference to the local area and the areas around it where it operates when spending its CSR amount. This is a preference under the first proviso to section 135(5), not a restriction to the registered-office State or any particular class of districts.

  1. AThe company must give preference to the local area and areas around it where it operatesCorrect
  2. BThe company must spend only in the State of its registered office
  3. CThe company must spend only in aspirational districts
  4. DNo geographical preference is mentioned in section 135

Explanation

The first proviso to section 135(5) states that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for CSR. It is a preference, not an exclusive restriction to a State or district category.

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