Corporate Social Responsibility Policy
BOI Shareholding Limited
Introduction
The Ministry of Corporate Affairs, Government of India has recently notified Section 135 of the Companies Act, 2013 along with Companies (Corporate Social Responsibility Policy) Rules, 2014 and other notifications related thereto which makes it mandatory (with effect from 1st April, 2014) for certain companies who fulfil the criteria as mentioned under Sub Section 1 of Section 135 to comply with the provisions relevant to Corporate Social Responsibility.
About CSR
The term “Corporate Social Responsibility (CSR)” can be referred to as a corporate initiative to assess and take responsibility for the company’s effects on the environment and impact on social welfare.
Applicability of CSR
The companies on whom the provisions of the CSR shall be applicable are contained in Sub Section 1 of Section 135 of the Companies Act, 2013. As per the said section, the companies having Net worth of INR 500 crore or more, or Turnover of INR 1000 crore or more; or Net Profit of INR 5 crore or more (Profit Before Tax) during any financial year shall be required to constitute a Corporate Social Responsibility Committee of the Board “hereinafter CSR Committee” with effect from 1st April, 2014.
In the F.Y. 2013-14 and 2015-16, our company surpassed the prescribed limit for Net Profits of Rs. 5 crore for formation of CSR committee as per the Act. Thus, the company is liable to comply with the provisions of sec135 (1) of the Companies Act 2013,
Compliance with the provisions of the CSR
Once a company is covered under the ambit of the CSR, it shall be required to comply with the provisions of the CSR. The companies covered under the Sub section 1 of Section 135 shall be required to do the following activities:
- As provided under Section 135(1) itself, the companies shall be required to constitute the Corporate Social Responsibility Committee of the Board "hereinafter CSR Committee". The CSR Committee shall be comprised of 3 or more directors, out of which at least one director shall be an independent director.
- The Board's report shall disclose the compositions of the CSR Committee.
- All such companies shall spend, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. It has been clarified that the average net profits shall be calculated in accordance with the provisions of Section 198 of the Companies Act, 2013. Also, proviso to the Rule provide 3(1) of the CSR Rules that the net worth, turnover or net profit of a foreign company of the Act shall be computed in accordance with balance sheet and profit and loss account of such company prepared in accordance with the provisions of clause (a) of sub-section (1) of section 381 and section 198 of the Companies Act, 2013.
Reporting for CSR
Rule 8 of the CSR Rules provides that the companies, upon which the CSR Rules are applicable on or after 1st April, 2014 shall be required to incorporate in its Board’s report an annual report on CSR containing the following particulars:
- A brief outline of the company's CSR Policy, including an overview of projects or programs proposed to be undertaken and a reference to the web link to the CSR policy and projects or programs;
- The composition of the CSR Committee;
- Average net profit of the company for the last three financial years;
- Prescribed CSR Expenditure (2% of the amount of the average net profit for the last 3 financial years);
- Details of CSR Spent during the financial year;
- In case the company has failed to spend the 2% of the average net profit of the last three financial years, the reasons thereof.