♠ CSR Committee to have
♠ Board’s Report shall disclose the constitution of CSR Committee
♠ CSR Committee will
SCHEDULE VII ACTIVITIES:-
CSR SPEND IN FINANCIAL YEAR
Where the company fails to spend such amount, the Board shall, in its report, specify the reasons for not spending the amount.
Now after perusing the whole section read with(Corporate Social Responsibility Policy) Rules, 2014 i am of the considered view that section 135 is not at all applicable to pvt. ltd. companies. Sub section 1 of section 135 read as,
♠ 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.
The intent of the legislature is clear that the provisions are not applicable to pvt. ltd. companies and all those public companies which are not require to appoint independent directors ex facie. As pvt. ltd. company has minimum of 2 directors whereas public ltd. company has minimum of 3 directors.
Now the Rule 5 of the Companies ( Corporate Social Responsibility Policy) Rules, 2014 says about constitution of 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 135 which is not required to appoint an independent director pursuant to sub-section (4) of section 149 of the Act, shall have its CSR Committee without such director;
(ii) a private company having only two directors on its Board shall constitute its CSR Committee with two such directors;
(iii) with respect to a foreign company 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 380 of the Act and another person shall be nominated by the foreign company.
NOW Comparing Sub section (1) of section 135 with Rule 5 I am of the considered view that Rule 5 is ultra vires the law as Rule can’t override the provisions of the section in the Act.
One may refer Jokhan Singh And Ors. vs Marjad Koeri And Ors. on 12 August,1971.
Equivalent citations: AIR 1972 Pat 208, 1972 CriLJ 788.
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