Corporate Social Responsibility Questions and Answers

Q: The Corporate Social Responsibility Committee consists of :

The CSR Committee consists of three or more directors, of whom at least one should be an independent director.Section 135(1) of the Companies Act, 2013 requires every company meeting the net worth, turnover or net profit thresholds to 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 Act does not require four directors, nor that all members be independent. (Companies not required to appoint an independent director may have two directors, but option B states the general rule in the Act.)

Q: The activities to be undertaken by corporate social responsibility committee of a company are specified in which Schedule of Companies Act, 2013 ?

The CSR activities are specified in Schedule VII.Section 135 of the Companies Act, 2013 requires qualifying companies to form a CSR committee and spend on activities listed in Schedule VII, such as eradicating hunger and poverty, promoting education and health, gender equality, environmental sustainability, protecting national heritage, and contributions to specified funds.Schedule V deals with the appointment and remuneration of managerial personnel, Schedule III with the format of financial statements, and Schedule VI with infrastructure projects and activities.

Q: Which of the following company is required to constitute a corporate social responsibility committee ?

The answer is every company having net worth of Rs. 500 crores or more.Section 135(1) of the Companies Act, 2013 requires every company having a net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more, or net profit of Rs. 5 crore or more, during the immediately preceding financial year, to constitute a Corporate Social Responsibility Committee of the Board.The other figures confuse the thresholds: Rs. 1,000 crore is the turnover test, not the net worth test, Rs. 5 crore is the net profit test, and Rs. 100 crore is not a CSR threshold at all.

Q: Social responsibility committee to be established by a company under Section 135 of the Companies Act, 2013 if a company having :

The thresholds are net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more, or net profit of Rs. 5 crore or more.Section 135(1) of the Companies Act, 2013 requires a company that meets any one of these tests during the immediately preceding financial year to constitute a Corporate Social Responsibility Committee of the Board and to spend at least 2% of its average net profits on CSR.The other options give invented lower figures for net worth, turnover and profit.

Q: The Board of Directors of every company has to ensure that the company spends, in every financial year of the average net profit of the company during the last three preceeding financial years in persuance of the recommendations of :

The spending is in pursuance of the CSR Policy recommended by the Social responsibility committee.Section 135 of the Companies Act, 2013 requires qualifying companies to form a Corporate Social Responsibility Committee of the Board, which formulates and recommends a CSR Policy. Section 135(5) then requires the Board to ensure that the company spends at least two percent of its average net profit of the three immediately preceding financial years in pursuance of that policy.The key prefers the option naming the committee together with the CSR Policy, since the spending follows the policy, not the committee's say alone. The annual general meeting and an ordinary Board meeting are not the source of the requirement.

The Corporate Social Responsibility Committee consists of :

A.Four or more directors
B.Three or more directors of whom at least one should be independent director
C.Two or more directors all of whom should be independent directors
D.Two independent directors.

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: B

The CSR Committee consists of three or more directors, of whom at least one should be an independent director.

Section 135(1) of the Companies Act, 2013 requires every company meeting the net worth, turnover or net profit thresholds to 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 Act does not require four directors, nor that all members be independent. (Companies not required to appoint an independent director may have two directors, but option B states the general rule in the Act.)

Discuss in Forum

The activities to be undertaken by corporate social responsibility committee of a company are specified in which Schedule of Companies Act, 2013 ?

A.Schedule V
B.Schedule III
C.Schedule VI
D.Schedule VII

Exam Year(s)

MH SET - 2020, SET Exam - 2020,

Answer: D

The CSR activities are specified in Schedule VII.

Section 135 of the Companies Act, 2013 requires qualifying companies to form a CSR committee and spend on activities listed in Schedule VII, such as eradicating hunger and poverty, promoting education and health, gender equality, environmental sustainability, protecting national heritage, and contributions to specified funds.

Schedule V deals with the appointment and remuneration of managerial personnel, Schedule III with the format of financial statements, and Schedule VI with infrastructure projects and activities.

Discuss in Forum

Which of the following company is required to constitute a corporate social responsibility committee ?

A.Every company having net worth of Rs. 500 crores or more
B.Every company having net worth of Rs. 5 crores or more
C.Every company having net worth of Rs. 100 crores or more
D.Every company having net worth of Rs. 1000 crores or more

Exam Year(s)

MH SET - 2021, SET Exam - 2021,

Answer: A

The answer is every company having net worth of Rs. 500 crores or more.

Section 135(1) of the Companies Act, 2013 requires every company having a net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more, or net profit of Rs. 5 crore or more, during the immediately preceding financial year, to constitute a Corporate Social Responsibility Committee of the Board.

The other figures confuse the thresholds: Rs. 1,000 crore is the turnover test, not the net worth test, Rs. 5 crore is the net profit test, and Rs. 100 crore is not a CSR threshold at all.

Discuss in Forum

Social responsibility committee to be established by a company under Section 135 of the Companies Act, 2013 if a company having :

A.Networth of Rs. 500 crores or more, or turnover of Rs. 1000 crores rupee or a net profit of Rs. 5 croes or more during a financial year
B.Net worth of Rs. 400 crores or more, or turnover of Rs. 700 crores or more or a net profit of Rs. 4 crores or more during a financial year
C.Net worth of Rs. 300 crores or more, or turnover of Rs. 500 crores or more on a net profit of Rs. 3 crores or more during a financial year
D.Net worth of Rs. 200 crores or more, or turnover of Rs. 400 crores or more or a net profit of Rs. 2 crores or more during a financial year

Exam Year(s)

MH SET - 2024, SET Exam - 2024,

Answer: A

The thresholds are net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more, or net profit of Rs. 5 crore or more.

Section 135(1) of the Companies Act, 2013 requires a company that meets any one of these tests during the immediately preceding financial year to constitute a Corporate Social Responsibility Committee of the Board and to spend at least 2% of its average net profits on CSR.

The other options give invented lower figures for net worth, turnover and profit.

Discuss in Forum

The Board of Directors of every company has to ensure that the company spends, in every financial year of the average net profit of the company during the last three preceeding financial years in persuance of the recommendations of :

A.Annual general meeting
B.Social Responsibility Committee
C.Social responsibility committee under CSR Policy of the company
D.Board of Directors Meeting

Exam Year(s)

MH SET - 2025, SET Exam - 2025,

Answer: C

The spending is in pursuance of the CSR Policy recommended by the Social responsibility committee.

Section 135 of the Companies Act, 2013 requires qualifying companies to form a Corporate Social Responsibility Committee of the Board, which formulates and recommends a CSR Policy. Section 135(5) then requires the Board to ensure that the company spends at least two percent of its average net profit of the three immediately preceding financial years in pursuance of that policy.

The key prefers the option naming the committee together with the CSR Policy, since the spending follows the policy, not the committee's say alone. The annual general meeting and an ordinary Board meeting are not the source of the requirement.

Corporate Social Responsibility Questions and Answers

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