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CSEET · Economic and Business Environment · Elements of Corporate Governance

Where the amount a company is required to spend on CSR under section 135(5) does not exceed fifty lakh rupees, what is the position regarding the CSR Committee?

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

  1. AThe Board of Directors discharges the functions of the Committee, and constitution of the Committee is not requiredCorrect
  2. BThe Committee must still be formed with at least three directors
  3. CThe Committee must be formed with at least one independent director
  4. DThe company is exempt from CSR obligations altogether

Explanation

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

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