Corporate Social Responsibility (CSR) Obligations for Public Limited Companies

Introduction
Corporate Social Responsibility (CSR) has become a statutory obligation for certain companies in India, including Public Limited Companies. Introduced under Section 135 of the Companies Act, 2013, CSR reflects a company’s commitment to contribute to the social and environmental development of the country. It ensures that businesses go beyond profit-making to support sustainable and inclusive growth. This article briefly outlines the CSR obligations that apply to Public Limited Companies in India.

Applicability of CSR Provisions
CSR provisions apply to every Public Limited Company that, during any financial year, meets any of the following thresholds:

• Net worth of ₹500 crore or more, or
  
• Turnover of ₹1,000 crore or more, or
  
• Net profit of ₹5 crore or more.
  

If any of these conditions are met, the company is required to comply with CSR regulations for that financial year.

Constitution of CSR Committee
Eligible Public Limited Companies must constitute a CSR Committee of the Board consisting of at least three directors, including at least one independent director. The committee is responsible for formulating and recommending a CSR policy, monitoring its implementation, and reporting progress to the Board.

Minimum CSR Expenditure Requirement
Companies are required to spend at least 2% of their average net profits (calculated over the last three financial years) on CSR activities. If the company fails to spend the required amount, it must specify the reasons in its Board report. Unspent amounts must either be transferred to a specified fund or a separate CSR account, depending on the type of project.

Permissible CSR Activities
CSR expenditure must be made on activities listed in Schedule VII of the Companies Act. These include:

• Eradicating hunger and poverty
  
• Promoting education and gender equality
  
• Environmental sustainability
  
• Rural development projects
  
• Support to health care and sanitation
  
• Contributions to specified government funds
  

CSR should not be treated as charity but as a strategic tool to support long-term social development.

Disclosure and Reporting
Public Limited Companies must disclose their CSR policy and spending in their Board Report and on their official websites. Companies are also required to file Form CSR-2 with the Ministry of Corporate Affairs detailing CSR expenditures and activities.

Conclusion
CSR obligations ensure that Public Limited Companies contribute meaningfully to society and the environment. By integrating CSR into their governance structure, these companies help address critical social issues and promote responsible business conduct. Compliance with CSR provisions not only fulfills legal mandates but also enhances corporate reputation and stakeholder trust.

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