135. Corporate Social Responsibility

(1) Every company having net worth of rupees five hundred crore or more, or

turnover of rupees one thousand crore or more or a net profit of rupees five crore or more

during any financial year shall constitute a Corporate Social Responsibility Committee of the

Board consisting of three or more directors, out of which at least one director shall be an

independent director.

(2) The Board's report under sub-section (3) of section 134 shall disclose the

composition of the Corporate Social Responsibility Committee.

(3) The Corporate Social Responsibility Committee shall,—

(a) formulate and recommend to the Board, a Corporate Social Responsibility

Policy which shall indicate the activities to be undertaken by the company as

specified in Schedule VII;

(b) recommend the amount of expenditure to be incurred on the activities referred

to in clause (a); and

(c) monitor the Corporate Social Responsibility Policy of the company from time

to time.

(4) The Board of every company referred to in sub-section (1) shall,—

(a) after taking into account the recommendations made by the Corporate Social

Responsibility Committee, approve the Corporate Social Responsibility Policy for the

company and disclose contents of such Policy in its report and also place it on the

company's website, if any, in such manner as may be prescribed; and

(b) ensure that the activities as are included in Corporate Social Responsibility

Policy of the company are undertaken by the company.

(5) The Board of every company referred to in sub-section (1), shall ensure that the

company spends, 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:

Provided that the company shall give preference to the local area and areas around it

where it operates, for spending the amount earmarked for Corporate Social Responsibility


Provided further that if the company fails to spend such amount, the Board shall, in its

report made under clause (o) of sub-section (3) of section 134, specify the reasons for not

spending the amount.

Explanation.—For the purposes of this section “average net profit” shall be calculated

in accordance with the provisions of section 198.