Provision for Corporate Social Responsibility
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Under Companies Act, 1956 there is no provision for Corporate Social Responsibility (CSR) but the Companies Bill, 2012 incorporates a provision of CSR under Clause 135.
This Clause states that every company having net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more or net profit of rupees five crore or more during any financial year, shall constitute a CSR Committee of the Board consisting of three or more Directors, including at least one Independent Director, to recommend activities for discharging corporate social responsibilities in such a manner that the company would spend at least 2 per cent of its average net profits of the previous three years on specified CSR activities.
Giving this information in written reply to a question in the Rajya Sabha today, Shri Sachin Pilot, Minister of Corporate Affairs, said that such expenditure will be incurred directly by the companies.
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