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CS Professional · CSR and Social Governance · Corporate Social Responsibility

Godavari Foods Ltd has a CSR obligation of Rs 40 lakh for the year. Which statement is correct about its CSR Committee?

Because the amount to be spent does not exceed Rs 50 lakh, the company need not constitute a CSR Committee. The Board of Directors discharges the Committee's functions, but the obligation to spend the required amount continues to apply.

  1. AIt must still constitute a CSR Committee of three directors including an independent director
  2. BIt need not constitute the Committee, and the Board of Directors discharges the Committee's functionsCorrect
  3. CIt must constitute a Committee of two directors only
  4. DIt is exempt from the CSR spending requirement

Explanation

Where the amount to be spent under section 135(5) does not exceed Rs 50 lakh, the requirement to constitute a CSR Committee does not apply and the Board discharges its functions. Rs 40 lakh is below that limit. The spending obligation itself remains, so exemption from spending is wrong.

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