Board & Governance

CSR Policy & Report Format

Corporate social responsibility obligations are enforceable, with consequences for unspent amounts and specific disclosure requirements. Treat the policy as a compliance document with a governance trail, not as a statement of intent.

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Corporate Social Responsibility Policy

[COMPANY NAME]

Item	Detail
Approved by	The Board of Directors on [DATE], on the recommendation of the CSR Committee
Effective from	[DATE]
Version	[NUMBER]
Policy owner	[DESIGNATION]
Review frequency	Annually, and on any change in law
Published at	[WEBSITE LINK]

1. Applicability

1.1The corporate social responsibility provisions of the Companies Act, 2013 apply to a company which, during the immediately preceding financial year, had a net worth, turnover or net profit of not less than the amounts prescribed. Applicability is tested afresh each financial year against the figures for the immediately preceding financial year.

1.2The applicability position of the Company is recorded in Annexure A and shall be reassessed at the first Board meeting of each financial year.

1.3Where the Company ceases to meet the thresholds for the period prescribed, the requirement to constitute a CSR Committee and to comply with the obligations under this policy shall cease, subject to the obligation to spend any amount already required to be spent and any amount lying unspent.

2. Governance

2.1CSR Committee. The Board has constituted a Corporate Social Responsibility Committee comprising the directors named in Annexure B. [Where the amount required to be spent by the Company does not exceed the amount prescribed, the Company is not required to constitute a CSR Committee, and the functions of the Committee under this policy shall be discharged by the Board.]

2.2The Committee shall:

(a)formulate and recommend to the Board a CSR policy indicating the activities to be undertaken, and recommend any amendment to it;

(b)recommend the amount of expenditure to be incurred on each activity;

(c)formulate and recommend to the Board an annual action plan setting out the list of projects, the manner of execution, the modalities of utilisation of funds, the implementation schedule, the monitoring and reporting mechanism, and the details of any impact assessment;

(d)monitor the CSR policy and the annual action plan from time to time, and recommend any alteration to the plan during the year, based on reasonable justification recorded in writing; and

(e)satisfy itself, and place before the Board a certification from the [Chief Financial Officer], that the funds disbursed have been utilised for the purposes and in the manner approved.

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Notes for use

These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.

Applicability is tested every year, both ways

The obligation arises where any one of the net worth, turnover or net profit thresholds was met in the immediately preceding financial year. A company can therefore fall within the requirement for the first time on the strength of a single profitable year, and can fall out of it again. Test it at the first Board meeting of each financial year using Annexure A, and where it applies for the first time, remember that the committee, the policy, the action plan and the spend must all be put in place within that year.

Net profit for CSR is not the profit in the accounts

The amount to be spent is a percentage of the average net profit computed in the specific manner the Act prescribes for this purpose, which differs from the profit shown in the statement of profit and loss. Getting this wrong understates or overstates the obligation and is a recurring audit finding. Document the computation in Annexure C and have it reviewed rather than taking the figure from the accounts.

The committee may not be required

Where the amount required to be spent does not exceed the amount prescribed, no CSR Committee is needed and the Board discharges its functions. Many smaller companies constitute a committee unnecessarily, then fail to hold its meetings, and create a compliance failure where none was required. Check the position before constituting.

Unspent money does not simply stay in the bank

This is the provision that changed the character of the obligation. Unspent amounts relating to an ongoing project must be transferred to a dedicated Unspent CSR Account within the period prescribed after the year end and spent within the further period allowed; unspent amounts not relating to an ongoing project must be transferred to a specified fund. Failing to transfer is a distinct default from failing to spend. Diarise both dates immediately after the year end.

Ongoing project is a defined term with a time limit

It is not simply a project that is continuing. It has a maximum timeline, and the classification determines whether unspent money goes to the Unspent CSR Account or straight to a specified fund. Record the classification in the annual action plan at the time of approval — Annexure D has a column for it — rather than deciding retrospectively when the year end arrives.

Implementing agencies must be registered

An implementing agency must be of a permitted category, must hold the prescribed registration and registration number, and must have an established track record of the duration prescribed. Obtain and retain the registration certificate before disbursing, not afterwards. Money disbursed to an unregistered agency may not count as CSR spend at all, which leaves the obligation unmet and the money gone.

What does not count

Clause 4.3 is the list that causes the most disappointment: employee welfare, marketing-driven sponsorship, anything done to comply with another statute, activities outside India, and political contributions. Companies frequently plan CSR around an activity that turns out to be excluded. Test each proposed project against Clause 4.3 at the planning stage.

Disburse against milestones

Clause 5.4 is not a legal requirement but it is the control that prevents the most common practical failure: money advanced in full at the start of a project and never accounted for. Milestone disbursement against utilisation certificates gives the Chief Financial Officer something to certify under Clause 7.2.

Record the reason for shortfall at the time

The Board must specify in its report the reason for any amount unspent. A reason constructed months later when the report is being drafted reads as one. Where a project slips, record the reason in the Committee minutes at the time, and the disclosure writes itself.

Impact assessment has its own threshold

It applies only where the average CSR obligation exceeds the prescribed amount, and then only to projects above a prescribed value completed at least a year earlier. The cost may be booked as CSR expenditure subject to a limit. Check both thresholds before commissioning an assessment, and before assuming one is not needed.

Capital assets created through CSR

Where a capital asset is created or acquired through CSR spend, it may only be held in the name of an entity of a permitted category, and the details must be reported. An asset created with CSR funds and held in the Company’s own name is a defect that is difficult to unwind. Settle the holding entity before the asset is created.

Disclosure and filing

The annual report on CSR activities in the prescribed format must be annexed to the Board’s report, the policy and the projects must be on the website, and the CSR return must be filed in the form and within the period prescribed. These are three separate obligations and the filing is the one most often missed.

Current as of

Reflects Indian law current as of {{DATE OF USE}}. Thresholds, the percentage, the periods for transfer of unspent amounts, the registration requirements for implementing agencies and the prescribed report format all change — have the policy and the annual action plan reviewed by a company secretary each year.

This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, company secretary, or chartered accountant as relevant) before you rely on it.