State the meaning of Corporate Social Responsibility as per the Companies Act 2013.
In India, the concept of Corporate Social Responsibility (CSR) is governed by Clause 135 of the Companies Act, 2013. This legislation makes CSR mandatory for companies meeting specific financial thresholds. It is applicable to companies with an annual turnover of 1,000 crore or more, or a net worth of Rs. 500 crore or more, or a net profit of Rs. 5 crore or more.
The Act requires eligible companies to constitute a CSR Committee of board members, including at least one independent director. Companies are mandated to spend 2% of their average net profit from the previous three years on CSR activities. These activities are specified under Schedule VII of the Act and must be undertaken in India. Activities meant exclusively for employees and their families do not qualify as CSR under the Act.
Explanation
The question specifically asks for the meaning of CSR as per the Companies Act 2013. The context provides clear information about Clause 135, the applicability criteria (turnover, net worth, net profit), the requirement for a CSR committee, the 2% spending mandate, and the conditions under Schedule VII. This answer integrates all these factual points from the textbook context in a structured manner suitable for a 3-mark short answer question.