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CS Professional · Compliance Management, Audit and Due Diligence · Compliance Framework

Orion Steels Ltd. must spend Rs 40 lakh on CSR for the year. The CSR amount does not exceed Rs 50 lakh. The board has not constituted a CSR Committee. How should the compliance officer advise?

No CSR Committee is required, because section 135(9) exempts companies whose CSR spending obligation does not exceed Rs 50 lakh from constituting one. The Board of Directors itself performs the functions of the committee, so the company is not in default.

  1. AThe company is in default, since a CSR Committee is mandatory for every company under section 135
  2. BThe committee is not required, and the Board of Directors discharges its functionsCorrect
  3. CThe committee is not required, and the functions pass to the audit committee
  4. DThe committee is needed, but it can consist of a single director

Explanation

Under section 135(9), where the amount to be spent does not exceed Rs 50 lakh, the requirement to constitute the CSR Committee does not apply. The Board of Directors discharges the committee's functions. The first option ignores this exemption.

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