Whether the activity a company is required to do as per statutory obligation under any law, would be termed as CSR activity?

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No, the activity undertaken in pursuance of any law would not be considered as CSR activity. In this regard, please refer to the Ministry of Corporate Affairs Circular No. 21/2014 dated June 18, 2014 where it is clarified that expenses incurred by companies for the fulfilment of any Act/ Statute of regulations (such as Labour… Read more »

There are certain corporate groups who run hospitals and educational institutions, will this be considered as CSR?

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Here are two conditions – If the hospitals and educational institutions are part of the business activity of the company they would not be considered as CSR activity. if some charity is done by these hospitals or educational institutions, without any statutory obligation to do so, then it can be considered as CSR activity. There… Read more »

Whether the provisions of CSR are applicable to section 8 companies?

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Since section 8 companies are supposed to apply their profits in promoting the objects such as commerce, art, science, sports, education etc. There is no specific exemption given to section 8 companies with regard to applicability of section 135, hence section 8 companies are required to follow CSR provisions. Corporate Social Responsibility is covered under… Read more »

What are the consequences for non-compliance of CSR provisions?

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In case of any non compliance, the Companies Act, 2013 imposes an obligation on the board to the company at Annual General Meeting (AGM). Though there is no specific provision is provided for non compliance for spending on CSR under the Companies Act 2013 Section 450 is an overarching provision for punishing a company or… Read more »

In case of companies having multi-locational operations, which local area of operations should the company choose for spending the amount earmarked for CSR operations?

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According to section 135(5) of the Companies Act 2013 provides that a company shall give preference to the local area and the areas around it where it operates for spending the amount earmarked for CSR activities. But, In case of multi-locational operations, the company could exercise discretion in choosing the area for which it wants to… Read more »

In case the company has appointed personnel exclusively for implementing the CSR activities of the company, can the expenditure incurred towards such personnel in terms of staff cost etc. be included in the expenditure earmarked for CSR activities?

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In General Circular No. 21/2014 dated 18th June, 2014, The Ministry of Corporate Affairs clarifies that Salaries paid by the companies to regular CSR staff. In case of proportion can be factored into CSR project cost as part of the CSR expenditure. The word ‘Company‘ is an amalgamation of the Latin word ‘Com’ meaning “with… Read more »

In case the appointment of an auditor is not ratified by the shareholders at annual general meeting as required under proviso to Section 139(1), what recourse does the company have?

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According to Rule 3(7) of the Companies (Audit and Auditors) Rule 2014 explains that in case the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auds after following the procedure laid down in this behalf under the Act. Therefore, if… Read more »

Can an Independent Director of a Company be appointed as Independent Director of its holding, subsidiary or associate company?

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Yes, as per clause 49 III. (i) of the listing agreement. An Independent Director of a Company can be appointed as Independent Director of its Associate/sister concern. Also, as per clause 49 III. (i) of the listing agreement,  at least one independent director on the Board of Directors of the holding company shall be a director on… Read more »