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CS Professional · CSR and Social Governance · CSR Policy

Meridian Textiles Ltd is covered by Section 135. Its CSR obligation for the year, computed at two per cent of average net profit, is Rs 40 lakh. How must the CSR functions be handled?

The Board itself discharges the CSR Committee's functions. Under Section 135(9), where the amount to be spent does not exceed Rs 50 lakh, constituting the Committee is not required. The spending obligation still continues, so Rs 40 lakh must be spent.

  1. AA CSR Committee of three directors including an independent director must still be constituted
  2. BThe Board of Directors discharges the functions of the CSR Committee as the amount does not exceed Rs 50 lakhCorrect
  3. CThe company is exempt from CSR altogether
  4. DA committee of two directors must be formed with no independent director

Explanation

Section 135(9) says that where the amount to be spent under sub-section (5) does not exceed fifty lakh rupees, the requirement to constitute the CSR Committee does not apply and the Board discharges the Committee's functions. The CSR spending obligation itself remains, so exemption is wrong.

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