CSR ACT & RULES

HARBINGER OF

HARMONY AND SYNERGY

BETWEEN

THE COMPANY AND THE SURROUNDINGS

INTENT OF THE LEGISLATION

• WHY NOT A CESS • LONG TERM COMMITMENT• FOCUS1. GEOGRAPHY2. IMPACT• ACCOUNTABILITY1. BOARD2. PUBLIC3. GOVERNMENT

SASALIENT FEATURES OF THE ACT

• COMPANY HAVING NET WORTH OF RUPEES 500 CRORE OR MORE, OR TURNOVER OF RUPEES 1000 CRORE OR MORE OR A NET PROFIT OF RUPEES 5 CRORE OR MORE DURING ANY FINANCIAL YEAR TO DO CSR (EVERY COMPANY INCLUDING ITS HOLDING OR SUBSIDIARY OR A FOREIGN COMPANY)

• COMPANY SHALL CONSTITUTE A CORPORATE SOCIAL RESPONSIBILITY COMMITTEE OF THE BOARD CONSISTING OF THREE OR MORE DIRECTORS, OUT OF WHICH AT LEAST ONE DIRECTOR SHALL BE AN INDEPENDENT DIRECTOR.(DIFFERENT NUMBERS FOR DIFFERENT TYPE OF COMPANIES. COMPANY NOT COVERED UNDER PROVISION ABOVE FOR THREE CONSECUTIVE YEARS NEED NOT HAVE TO CONSTITUTE COMMITTEE AND TAKE UP SUBSEQUENT STEPS TILL IT BECOMES AGAIN COVERED)

SALIENT FEATURES OF THE ACT

COMMITTEE SHALL,—

(A)FORMULATE AND RECOMMEND TO THE BOARD, A CORPORATE SOCIAL RESPONSIBILITY POLICY WHICH SHALL INDICATE THE ACTIVITIES TO BE UNDERTAKEN BY THE COMPANY AS SPECIFIED IN SCHEDULE VII;(B)RECOMMEND THE AMOUNT OF EXPENDITURE TO BE INCURRED ON THE ACTIVITIES REFERRED TO IN CLAUSE (A)(C) MONITOR THE CORPORATE SOCIAL RESPONSIBILITY POLICY OF THE COMPANY FROM TIME TO TIME.

SALIENT FEATURES OF THE ACT

THE BOARD SHALL(A)APPROVE THE CORPORATE SOCIAL RESPONSIBILITY POLICY FOR THE COMPANY AND DISCLOSE CONTENTS OF SUCH POLICY IN ITS REPORT AND ALSO PLACE IT ON THE COMPANY'S WEBSITE; AND(B)ENSURE THAT THE ACTIVITIES INCLUDED IN CORPORATE SOCIAL RESPONSIBILITY POLICY (ARE RELATED TO THE ACTIVITIES INCLUDED IN SCHDULE VII OF THE ACT) ARE UNDERTAKEN BY THE COMPANY.

SALIENT FEATURES OF THE ACT

• BOARD TO ENSURE THAT; • COMPANY SPENDS, IN EVERY FINANCIAL YEAR, AT LEAST

TWO PER CENT OF THE AVERAGE NET PROFITS OF THE THREE IMMEDIATELY PRECEDING FINANCIAL YEARS

• COMPANY SHALL GIVE PREFERENCE TO THE LOCAL AREA AND AREAS AROUND WHERE IT OPERATES, FOR SPENDING THE AMOUNT

• IF THE COMPANY FAILS TO SPEND SUCH AMOUNT, THE BOARD IN ITS REPORT SPECIFY THE REASONS FOR NOT SPENDING THE AMOUNT.

APPROACH TOWARDS CSR

• CSR HAS TO BE PROGRAMMES AND PROJECTS. CHARITIES AND DONATIONS, ONE OFF AND SPORADIC ACTIVITIES ARE NOT CSR

• AWARDS, MARATHONS, ADVERTISEMENTS, SPONSORSHIP OF TV PROGRAMMES NOT CSR

• PROGRAMMES/ACTIVITIES UNDERTAKEN IN COMPLIANCE WITH OTHER ACTS CANNOT BE COUNTED AGAINST CSR

SALIENT FEATURES OF CSR RULES

• CSR POLICY TO:• A. SPECIFY THE PROJECTS AND PROGRAMMES TO BE

UNDERTAKEN EXCLUDING ACTIVITIES UNDERTAKEN IN PURSUANCE OF NORMAL BUSINESS OF THE COMPANY

• B. PREPARE A LIST OF PROJECTS/PROGRAMMES PLANNED TO UNDERTAKEN DURING THE IMPLEMENTATION YEAR

• C. SPECIFY MODALITIES OF EXECUTION AND IMPLEMENTATION SCHEDULES FOR THE SAME;

• THE CSR COMMITTEE, SHALL PREPARE A TRANSPARENT MONITORING MECHANISM FOR ENSURING IMPLEMENTATION OF THE PROJECTS / PROGRAMMES / ACTIVITIES PROPOSED TO BE UNDERTAKEN BY THE COMPANY.

SALIENT FEATURES OF CSR RULES

• CSR SPEND TO BE 2% OF NET PROFIT AS PER PROVISIONS OF ACT.

• CSR POLICY TO SPECIFY THAT SURPLUS OF CSR ACTIVITIES NOT TO FORM PART OF BUSINESS PROFIT OF COMPANY

• {BETTER TO TRANSFER AND SPEND ALL FUNDS TO A FOUNDATION IF IT IS THERE OR TO ONE SEPARATE ACCOUNT TO KEEP DISTINCT TRACKING AND IDENTITY OR A GOOD IT SYSTEMS}

SALIENT FEATURES OF THE RULES

o MAY SET UP AN ORGANIZATION REGISTERED AS A TRUST OR SECTION 8 COMPANY, OR SOCIETY OR FOUNDATION TO FACILITATE CSR IMPLEMENTATION. COMPANY HAS TO SPECIFY THE PROGRAMMES TO BE UNDERTAKEN BY SUCH ORGANISATION TO UTILISE FUNDS PROVIDED AND ESTABLISH A MONITORING MECHANISM TO ENSURE THAT THE ALLOCATION IS SPENT FOR THE INTENDED PURPOSE ONLY.

o MAY ALSO IMPLEMENT ITS CSR PROGRAMMES THROUGH OTHER TRUSTS, SOCIETIES, OR FOUNDATION, ONLY IF SUCH ORGANIZATIONS HAVE AN ESTABLISHED TRACK RECORD OF AT LEAST THREE YEARS IN CARRYING ON ACTIVITIES IN RELATED AREAS

SALIENT FEATURES OF THE RULES

• COMPANIES MAY COLLABORATE OR POOL RESOURCES WITH OTHER COMPANIES TO UNDERTAKE CSR ACTIVITIES

• ONLY ACTIVITIES WHICH ARE NOT EXCLUSIVELY FOR THE BENEFIT OF EMPLOYEES OF THE COMPANY OR THEIR FAMILY MEMBERS SHALL BE CONSIDERED AS CSR ACTIVITY

• A FORMAT FOR REPORTING CSR IN THE ANNUAL REPORT IS EMBEDED IN THE RULES. SECTOR WISE, GEOGRAPHIC WISE, PROJECTWISE DETAILS OF EXPENDITURE ARE SOUGHT, WITH BREAK UP OF CONTENT AND OVERHEAD EXPENDITURES

• (MAY SPEND UPTO 5% OF CSR FUNDS FOR CAPACITY BUILDING)

FORMAT FOR CSR REPORT IN ANNUAL REPORT OF BOARD

• (BRIEF OUTLINE OF THE POLICY, OVER VIEW OF PROJECTS OR PROGRAMMES AND A REFERRENCE TO WEB LINK)

• (COMPOSITION OF CSR COMMITTEE)• (AVERAGE NET PROFIT OF THE COMPANY FOR THE

LAST 3 FINANCIAL YEARS)• (PRESCRIBED CSR EXPENDITURE: 2% OF ABOVE)

FORMAT TO REPORT ANNUAL CSR IMPLEMENTATION

• DETAILS OF CSR SPENT DURING THE YEAR: • A. TOTAL AMOUNT TO BE SPENT FOR THE YEAR: • B. AMOUNT (UNSPENT IF ANY):• C. (MANNER IN WHICH AMOUNT SPENT DURING THE

YEAR AS BELOW: )• (CSR EXPENDITURE TO INCLUDE ALL EXPENDITURE

INCLUDING CONTRIBUTION TO CORPUS?? FOR PROJECTS OR PROGRAMMES APPROVED BY BOARD BUT DOES NOT INCLUDE ANY EXPENDITURE ON AN ITEM NOT IN CONFIRMITY OR IN LINE WITH ACTIVITIES WHICH FALL WITH IN THE PERVIEW OF SCHEDULE VII)

FORMAT TO REPORT CSR IMPLEMENTATION

CSR PROJECT/ACTIVITY IDENTIFIED

SECTOR IN WHICH THE PROJECT IS COVERED

PROJECTS OR PROGRAMMES LOCAL AREA/OTHERS

SPECIFY STATE AND DISTRICT NAMES

AMOUNT OUTLAYED PROJECT / PROGRAMMEWISE

AMOUNT SPENTACONTENTBOVERHEADS

CUMULATIVE SPENT UPTO THE REPORTING PERIOD

AMOUNT SPENT ADIRECTBAGENCY

SALIENT FEATURES OF THE RULES

• ANNUAL REPORT TO HAVE RESPONSIBILITY STATEMENT, OF THE CSR COMMITTEE, THAT THE CSR POLICY IMPLEMENTATION AND MONITORING THEREOF IS, IN LETTER AND SPIRIT, IN COMPLIANCE WITH CSR OBJECTIVES

CSR – COMPANIES ACT, 2013SCHEDULE VII

• ACTIVITIES WHICH MAY BE INCLUDED IN CSR POLICIES.i. ERADICATING HUNGER, POVERTY AND MALNUTRITION.

PROMOTING PREVENTIVE HEALTH CARE AND SANITATION AND MAKING AVAILABLE SAFE DRINKING WATER;

ii. PROMOTION OF EDUCATION INCLUDING SPECIAL EDUCATION AND EMPLOYMENT ENHANCING VOCATIONAL SKILLS ESPECIALLY AMONG CHILDREN, WOMEN, ELDERLY AND DIFFERENTLY ABLED AND LIVELY HOOD ENHANCING PROJECTS;

iii. PROMOTING GENDER EQUALITY AND EMPOWERING WOMEN SETTING UP HOMES AND HOSTELS FOR WOMEN AND ORPHANS; SETTING UP OLD AGE HOMES, DAY CARE CENTERS AND SUCH OTHER FACILITIES FOR SENIOR CITIZENS AND MEASURES FOR REDUCING INEQUALITIES FACED BY SOCIALY AND ECONOMICALY BACKWARD GROUPS;

CSR – COMPANIES ACT, 2013SCHEDULE VII

• ACTIVITIES WHICH MAY BE INCLUDED IN CSR POLICIES.• iv ENSURING ENVIRONMENTAL SUSTAINABILITY, ECOLOGICAL

BALANCE, PROTECTION OF FLORA AND FAUNA, ANIMAL WELFARE, AGRO FORESTRY, CONSERVATION OF NATURAL RESOURCES AND MAINTAINING QUALITY OF SOIL, AIR AND WATER:

• v PROTECTION OF NATIONAL HERITAGE, ART AND CULTURE INCLUDING RESTORATION OF BUILDINGS AND SITES OF HISTORICAL IMPORTANCE AND WORKS OF ART; SETTING UP PUBLIC LIBRARIES; PROMOTION AND DEVELOPMENT OF TRADITIONAL ARTS AND CRAFTS;

• vi MEASURES FOR THE BENEFIT OF ARMY VETERANS, WAR WIDOWS AND THEIR DEPENDENTS;

• vii TRAINING TO PROMOTE RURAL SPORTS, NATIONALLY RECOGNISED SPORTS, PAR OLYMPIC SPORTS AND OLYMPIC SPORTS;

CSR – COMPANIES ACT, 2013SCHEDULE VII

• ACTIVITIES WHICH MAY BE INCLUDED IN CSR POLICIES.

• Viii CONTRIBUTION TO PRIME MINISTER’S NATIONAL RELIEF FUND OR ANY OTHER FUND SET UP BY THE CENTRAL GOVERNMENT FOR SOCIO-ECONOMIC DEVELOPMENT AND RELIEF AND WELFARE OF THE SCHEDULE CASTES, SCHDULE TRIBES, OTHER BACKWARD CLASSES, MINORITIES AND WOMEN;

• ix CONTRIBUTIONS OR FUNDS PROVIDED TO TECHNOLOGY INCUBATORS LOCATED WITHIN ACADEMIC INSTITUTIONS WHICH ARE APPROVED BY THE CENTRAL GOVERNMENT;

• x RURAL DEVELOPMENT PROJECTS;• SLUM DEVELOPMENT

APPROACH

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WANT TO WALK FAR WALK TOGTETHER

WE ARE

STEEL

WITH A

SOFT SOUL

SALUTING SYNERGY