Under Section 135 of the Companies Act, 2013, a company is required to constitute a Corporate Social Responsibility (CS

Solution

This provision is governed by Section 135(1) of the Companies Act, 2013. 1. The Applicability Criteria (The "CSR Trigger") Every company (including its holding or subsidiary, and a foreign company defined under section 2(42)) must constitute a CSR Committee if it satisfies ANY one of the following three conditions during the immediately preceding financial year: • Net Worth: Rupees 500 Crore or more; OR • Turnover: Rupees 1,000 Crore or more; OR • Net Profit: Rupees 5 Crore or more. 2. Note on "Net Profit" The "Net Profit" here is calculated in accordance with Section 198 of the Act (it is not just the profit shown in the P&L account, but "Net Profit" as specifically adjusted for managerial remuneration calculations). 3. Comparison with your "Small Company" Question While your original question about "Small Companies" (Section 2(85)) deals with exemptions and lighter compliance (Paid-up capital $\le$ ₹4 Cr and Turnover $\le$ ₹40 Cr), the CSR section deals with social obligation and applies to larger, more profitable entities. Summary Table of Thresholds