The document discusses the role of independent directors and corporate social responsibility (CSR) governance according to the Companies Act in India. It states that the Act requires companies to have an independent director on the CSR committee and sets criteria for who qualifies as an independent director. The CSR committee is responsible for formulating the CSR policy, recommending activities and expenditures, and monitoring implementation. The board approves the policy and ensures CSR activities are undertaken. Independent directors have duties to evaluate CSR performance and impact. The document outlines key elements of an effective CSR policy, implementation process, and performance management system according to the Act.
2. Companies Act - an overview
Putting in perspective
Independent directors
Setting perspective and priority – formulating policy
and framework
Setting M& E system
3. Companies Act - an overview
Putting in perspective
Independent directors
Setting perspective and priority – formulating policy
and framework
Setting M& E system
4. Applicability
•It will also apply to foreign companies registered in India
•Net profit will not include dividend income received from another Indian
company following the provisions of the companies law or from profits of its
own overseas branches
5. CSR Committee consisting of three or
more directors, out of which at least
one director shall be an independent
director
Unlisted public company or
private company can have a
committee without such an
independent director
A private company having only
two directors on its boards shall
constitute its committee with two
such directors
For foreign company, committee should have at least two persons
One: Resident in India authorized to accept on behalf of the company service of process and any notices or
other documents required to be served on the company
Other: nominated by the foreign company
CSR governance : CSR Committee
6. Role of CSR Committee and the board
Formulate and recommend a
CSR policy
Recommend activities and
amount of expenditure to be
incurred
Monitor the policy from time
to time
Constitute a CSR committee
Approve a CSR policy (indicating
the list of activities along with the
expenditure) & publish the same
in its report and on the website
Spend at least 2% of average net
profit during the three
immediately preceding financial
years. If not, specify the reasons
for not spending the amount
Ensure that the activities as are
included in CSR policy of the
company are undertaken by the
company
CSR CommitteeCSR Committee
BoardBoard
16. Reporting on CSR spend
CSR
project/activity
identified
Sector in
which the
project is
covered
Projects/
program
1) Local area
or other
2) State and
district of
the
project/progr
am
Project/
Program
wise
budget
(Amount
outlay)
Amount spent
on the
projects/progr
ams
Sub heads
1)Direct
expense
2) Overheads
Cumulative
expenditure
up to the
reporting
period
Amount
spent
direct or
through
impleme
ntation
agencies
17. Companies Act - an overview
Putting in perspective
Independent directors
Setting perspective and priority – formulating policy
and framework
Setting M& E system
18. Source: UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific ) Publication
Business responsibility perspective
21. Companies Act - an overview
Putting in perspective
Independent directors
Setting perspective and priority – formulating policy
and framework
Setting M& E system
23. Competencies of Independent Directors
No independent director shall hold office for more than two consecutive terms, but such independent
director shall be eligible for appointment after the expiration of three years of ceasing to become an
independent director
24. An independent director - neither himself nor any of his relatives is a Chief Executive or
director, by whatever name called, of any nonprofit organisation that receives twenty-five
per cent or more of its receipts from the company, any of its promoters, directors or its
holding, subsidiary or associate company or that holds two per cent or more of the total
voting power of the company; or who possesses such other qualifications as may be
prescribed
25. Role of CSR Committee and the board
Formulate and recommend a
CSR policy
Recommend activities and
amount of expenditure to be
incurred
Monitor the policy from time
to time
Constitute a CSR committee
Approve a CSR policy (indicating
the list of activities along with the
expenditure) & publish the same
in its report and on the website
Spend at least 2% of average net
profit during the three
immediately preceding financial
years. If not, specify the reasons
for not spending the amount
Ensure that the activities as are
included in CSR policy of the
company are undertaken by the
company
CSR CommitteeCSR Committee
BoardBoard
29. Companies Act - an overview
Putting in perspective
Independent directors
Setting perspective and priority – formulating policy
and framework
Setting M& E system
31. Companies Act - an overview
Putting in perspective
Independent directors
Setting perspective and priority – formulating policy
and framework
Setting M& E system
33. Source: Central government: Cost-effectiveness and improving annual reports,, Controller and Auditor General, New Zealand
Measuring performance and impact
Subsection 4 of clause 149
Every listed public company shall have at least one-third of the total number of directors as independent directors and the Central Government may prescribe the minimum number of independent directors in case of any class or classes of public companies.
Clause d of subsection 1 of 380 clause
the name and address or the names and addresses of one or more persons resident in India authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company;