G.S.R. 129(E).- In exercise of the powers conferred under section 135 and sub-sections (1) and
(2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the
following rules, namely: –
1. Short title and commencement. – (1) These rules may be called the Companies (Corporate Social
Responsibility Policy) Rules, 2014.
(2) They shall come into force on the 1st day of April, 2014.
2. Definitions.- (1 ) Inthese rules, unless the context otherwise requires, –
(a) “”Act”” means the Companies Act, 2013;
(b) “”””Annexure”””” means the Annexure appended to these rules;
(c) “”””Corporate Social Responsibility (CSR)”””” means and includes but is not limited to :·
(i) Projects or programs relating to activities specified in Schedule VII to the Act; or
(ii) Projects or programs relating to activities undertaken by the board of directors of a company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will cover subjects enumerated in Schedule VII of the Act.
(d) “”””CSR Committee”””” means the Corporate Social Responsibility Committee of the Board referred to in section 135 of the Act.
(e) “”””CSR Policy”””” relates to the activities to be undertaken by the company as specified in Schedule VII to the Act and the expenditure thereon, excluding activities undertaken in pursuance of nonnal course of business of a company;
(f) “”””Net profit”””” means the net profit of a company as per its fmancial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following, namely :·
(i) any profit arising from any overseas branch or branches of the company, whether operated as a separate company or otherwise; an any dividend received from other companies in India, which are covered under and complying with the provisions of section 135 of the Act:
(ii) Provided that net profit in respect of a financial year for which the relevant financial statements were prepared in accordance with the provisions of the Companies Act, 1956, (I of 1956) shall not be required to be re-calculated in accordance with the provisions of the Act:
(iii) Provided further that in case of a foreign company covered under these rules, net profit means the net profit of such company as per profit and loss account prepared in terms of clause (a) of subsection ( I) of section 381 read with section 198 of the Act
(2) Words and expressions used and not defined in these rules but defmed in the Act shall have the same 1neanings respectively assigned to them in the Act.
3. Corporate Social Responsibility. –
(I ) Every company including its holding or subsidiary, and a foreign company defined under clause (42) of section 2 of the Act having its branch office or project office in India, which fulfills the criteria specified in sub-section (1) of section I 5 of the Act shall comply with the provisions of section I 35 of the Act and these rules:
Provided that 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 Act.
(2) Every company which ceases to be a company covered under sub-section (1) of section 135 of the Act for three consecutive financial years shall not be required to –
(a) constitute a CSR Committee; and
(b) comply with the provisions contained in sub-section (2) to (5) of the said section, till such time it meets the criteria specified in sub-section (I) of section 135.
4. CSR Activities.-
( l ) The CSR activities shall be undertaken by the com pany, as per its stated CSR Policy, as projects or programs or activities (either new or ongoing), excluding activities undertaken i n pursuance of its normal course of business.
(2) The Board of a company may decide to undertake its CSR activities approved by the CSR Committee, through a registered trust or a registered society or a company established by the company or its holding or subsidiary or associate company under section 8 of the Act or othetwise:
(i) if such trust, society or company is not established by the company or its holding or subsidiary or associate company, it shall have an established track record of three years in undertaking similar programs or projects;
(ii) the company has specified the project or programs to be undertaken through these entities, the modalities of utilization of funds on such projects and programs and the monitoring and reporting 1nechanism.
(3) A co1npany may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR Committees of respective companies are in a position to report separately on such projects or programs in accordance with these rules.
(4) Subject to provisions of sub-section (5) of section 135 of the Act, the CSR projects or programs·or activities undertaken in India only shall amount to CSR Expenditure.
(5) The CSR projects or programs or activities that benefit only the employees of the company and their families shall not be considered as CSR activities in accordance with section 135 of the Act
(6) Companies may build CSR capacities of their own personnel as well as those of their Implementing agencies through Institutions with established track records of at least three financial years but such expenditure shall not exceed five percent. of total CSR expenditure of the company in one financial year.
(7) Contribution of any amount directly or indirectly to any political party under section 182 of the Act, shall not be considered as CSR activity.