The Companies (Corporate SocialRc.ponsibility Policyl Rules. 20 I 4

MINISTRY OF CORPORATO AFFAIRS
NOTIFICATION
New Delhi, the 27th February’ 2014

G.S.R, 129(E).- In exercise of the powers confered under section 135 and sub-sections (1) and
(2) of section 469 oi ihe Companies Act, 2013 (18 of 2013), the Cenhal Covemment hereby makes the
fnllowing rules. namely: –
1. Short title rDd commencement. – (1) These rules may be called the Companies (Corporate Social
Rc.ponsibility Policyl Rules. 20 I 4.
(2) Th€y shall come into force on the l”‘ day of April, 2014
2. Delinitions.- (l) In these rules, unless the context otherwise requires’ –
(a) “Act” mears the Coopanies Act, 2013;
(b) “Annexure” means the Annexue appended to these rules;
(c) “Corporate Social Responsibility (CSR)” means and includes but is not limited to i
(i) Projects or prograrns relating to activities specified ilr Schedule VII to the Act or
(ii) Projects or plo$ains relating to activities undertaken by the board of directors of a
iomp-y (SoarAi in p*suance of recommendations of the CSR Committee of the Board as
p”. d””tu*d CSn loii”y of the company subject to the condition that such policy will cover
subjects enumerated in Schedule Vll ofthe AcL
(d) “CSR Committee” means the Corporate Social Responsibility Commiftee ofthe Board refen€d to in
s€ction 135 ofthe Act
G) “CSR Policy” relates to the activities to be undertaken by the company as specified in Schedule VII to
the Act andihe expenditure thereon, excluding activities undertak€n in pursuance ofnormal oourse of
business of a compan):
(f) “Net profit” means the net profit of a company as Per its financial statement prcpared in accordance
‘ ‘
with ihe applicable Fovisions ofthe Aot, but shall not include the following, namely :-
(i) any profit arising from any overseas branch or branqhes ofthe company’ whether operated as
a separate company or otherwise; and
t iT,t ll €rc 3(i)l .IIKI fi IINF? I q-qFIRUI
(ii) any dividend received from other companies in India, which are covercd under and
complying ]vith the Fovisions ofsection 135 ofthe Act:
Provided that net profit in respect of a financial year for which the relevant financial
statements wer€ prepared in accordanc€ with the provisions of the Companies Act, 1956, (1
of 1956) shall not b€ required to be re-calculated in accordance with the provisions of the
Act:
Provided further that in case of a foaeign company covered under these rules, net prcfit means
the net p.oflt of such company as per profit and loss account prepar€d in terms of clause (a) of sub_
section fl) ofsection 381 read with section 198 ofthe Act.
(2) Words and expressions used and not defined in these rules but defined in the Act shall have the same
neanings respectively assigned to them in the Act.
J. Corporste Social Responsibility, –
(1) Every company including its holding or subsidiary, and a foreign company defined under clause (42) of
sectior 2 ofthe Act hnving its branch office or project office in Indi4 which fulfills the crit€ria specified in
sub-section (l) of section 135 ofthe Act shall comply with the provisions of section 135 ofthe Aot and these
rules:
Provided that net worth, turnover or net profit of a foreign company ofthe Act shall be computed in
accordance with balance sheet and profit and loss account ofsuch company prepared in accordance with the
provisions ofclause (a) ofsub-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) ofs€ction 135 of the
Act for thre€ consecutive financial years shall not be required to –
(a) constitute a CSR Committ€e; and
(b) comply with the provisions contain€d in sub-section (2) to (5) ofthe said section’
till such time it meets the criteria specified in sub-section (1) of section 135
4. CSR Activities.-
(l) The CSR activities shall be undertaken by the company, as per its stated CSR Policy, as projects or
programs or activiti€s (either new or ongoing), excluding activities undertaken in pursuance of its normal
course ofbusiness.
(2) The Board of a company may decide to undertake its CSR activities approved by the CSR
iommittee, througlr a registerea hust or a registercd sociery or a company established by the company or its
holding or subsidiary or associate company under section 8 ofthe Act or otherwise:
Provided that-
(i) if such trust, society or company is not established by the company or its holding or subsidiary or
tlssociate company, it shall have an €sfablished t’rack re€ord of three years in undertaking similar
programs or projects;
(ii) the company has specified the project or progams to be undertak€n through these entities, the
modalitiis of utilization of funds on such prcjects and programs and the monitoring and reporting
mechanism.
(l) A conpany nay also collaborate with other compaDies for mdertaking projects or programs or CSR
^”tlulti”s
in such a manner that the csR committees of resp€ctive companies are in a position to report
separately on such ptojects or programs in accordance with these n es
14r subiecl lo prc\ isions ofsub-secrion (5) of section l15 oflhe Act the CSR projects or programs or
acrivitie. unieraken in India only (hall amount lo CSR txpendilure
(5) The CSR projects or programs or activiti€s that benefit only the employees ofthe company and their
iuinlti”.
“tr”tt
not U”
“onsid€r;d
a; CSR activities in accordance with section 135 of the Act’
892 6tqq-3
7
THE CMETTT OF INDIA : ExTMORDINARY lPaRr II sEc.3(i)l
(6) Companies may build CSR capacities of their own personnel as well as those of their Implementing
agencies through Institutions with established track rccords of at least three financial years but such
expenditure shall not exceed five percent. of total CSR expenditure ofthe company in one financial year.
(7) Contribution ofany amount directly or indirectly to any political pafy under section 182 ofthe Act,
shall not be considered as CSR activity.
5. CSR Committees,-
( I ) The companies mentioned in the rule 3 shall constitute CSR Committee as under.-
( i.) an unlisted public company or a private company covered under sub-section ( I ) of section I 35 wh ich
is not required to appoint an independent director pursuant to sub-section (4) of section 149 of the Act, shatl
have its CSR Committee without such dir€ctor I
(iD a private company having only two diEctors on its Board shall constitute its CSR Commiftee with
tlvo such directors:
(iiD with r€spect to a foreign comp?rny covered under these rules, the CSR Committee shall comprise of
at least two persons of which one person shall be as specified under clause (d) of sub-section (1) of
section J 80 of the Act and another person shall be nominated by lhe for€ign company.
(2) The CSR Committee shall institute a hansparent monitoring mechanism for implementation of the
CSR projects or programs or activities undertaken by the company.
6. CSR Policy.-
( I ) The CSR Policy of the company shall, inter-alia, include the following, namely –
(a) a list of CSR projects or programs which a company plans to undertake falling within the purview
of the Schedule VII of the Act, specifving modalities of ex€cution of such project or programs and
implementatior schedules for the same; and
(b) monitoring process of such projects or Fograms:
Provided that the CSR activities does not include the activities undertaken in oursuance of normal
course of business of a company.
Provided further that the Board of Directors shall ensure that activities included by a company in its
Corporat€ Social Responsibility Policy are felated to the activities included in Schedule VII ofthe Act.
(2) The CSR Policy ofthe company shall speci| that the surplus arising out of the CSR projects or progams
or activities shall not form part ofthe business profit ofa company.
7. CSR Expenditure,- CSR expenditure shall include all expenditue hcluding contribution to corpus,
tbr projects or programs relating to CSR activities approved by the Board on the recommendation of fts aSR
Committee, but does not include ary expenditue on alt it€m not in conformity or not in line with activities
which fall within the purview ofSchedule VII ofthe Act.
8. CSR Reporting,-
(l) The Board’s Report ofa company covered under thes€ rules pertaining to a financial year commencing on
or after th€ le day ofApril, 2014 shall include an annual repoft on CSR containing particulars specified in
(2) In case of a foreign company, the balance sheer filed under sub-clause (b) of sub-section (l) of
section 38 i shall contain an Amexur€ regarding report on CSR.
9. Display of CSR actiyities on its website, –
The Board of Directors of the company shall, after taking into account the recommendations of CSR
Committee, approve the CSR Policy for the company and disclose contents of such policy in its rcport and the
same shall be displayed on the company’s website, if any, as per the particula$ sp€cifi€d in the Annexure.

[F. No. l/18/2013-CL.V]
RENUKA KUMA& Jt. Secy