Board of directors of Charity Ltd. wants to understand from you applicability of the provisions relating to CSR to companies including requirements to constitute CSR committee. Inform the Board.

Section 135 of the Companies Act, 2013 pertaining to Corporate Social Responsibility stipulates that: every company having net worth of ₹ 500 crore or more; or every company having turnover of ₹ 1000 crore or more; or every company having net profit of ₹ 5 crore or more. during the immediately preceding financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of 3 or more directors, out of which at least 1 director shall be an independent director. However, where a company is not required to appoint an independent director under Section 149(4) of the Companies Act, 2013, it shall have in its Corporate Social Responsibility Committee 2 or more directors. Further, as per Rule 5 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, a private company having only 2 directors on its Board shall constitute its CSR Committee with 2 such directors. With respect to a foreign company covered under these rules, the CSR Committee shall comprise of at least 2 persons of which 1 person shall be as specified under clause (d) of section 380(1) of the Companies Act, 2013 and another person shall be nominated by the foreign company. The role of the Corporate Social Responsibility Committee is- to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company in areas or subject, specified in Schedule VII of the Companies Act, 2013; to recommend the amount of expenditure to be incurred on the activities referred to in clause (a) above; and to monitor the Corporate Social Responsibility Policy of the company from time to time. After taking into account the recommendations of the CSR Committee, the Board shall approve the CSR Policy for the company.