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Sagar Foods Pvt Ltd is liable to spend Rs 40 lakh on CSR for the year under section 135(5). The Board asks the Company Secretary whether it must constitute a CSR Committee to demonstrate compliance. What is the correct advice?

The committee is not required. Under section 135(9), where the amount to be spent under section 135(5) does not exceed Rs 50 lakh, the CSR Committee requirement is inapplicable and the Board of Directors performs the committee's functions. The spending obligation still remains.

  1. AA committee of at least three directors including one independent director is mandatory
  2. BThe committee is not required, and the Board of Directors discharges the committee's functionsCorrect
  3. CA committee is needed, but may consist of two directors only
  4. DThe CSR obligation lapses entirely because the amount is small

Explanation

Section 135(9) says that where the amount to be spent does not exceed Rs 50 lakh, the requirement to constitute the committee does not apply and the Board discharges its functions. Rs 40 lakh is within this limit. The spending obligation itself still continues.

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