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CMA Final · Corporate and Economic Laws · Corporate Governance and Social Responsibility and Sustainability

Under Section 135 of the Companies Act, 2013, where the amount a company is required to spend on CSR under sub-section (5) does not exceed fifty lakh rupees, which of the following is correct?

Where the CSR amount to be spent does not exceed fifty lakh rupees, the company need not constitute a CSR Committee, and the Board of Directors performs the Committee's functions. The obligation to spend the amount continues; only the committee requirement is relaxed.

  1. AThe company must still constitute a CSR Committee with at least one independent director
  2. BThe requirement to constitute a CSR Committee does not apply and the Board of Directors discharges the Committee's functionsCorrect
  3. CThe company is exempt from spending the CSR amount altogether
  4. DThe CSR Committee must be formed with two directors drawn from the audit committee

Explanation

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

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