Role of Independent Directors

Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and

frameworkSetting M& E system

Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and

frameworkSetting M& E system

Applicability

•It will also apply to foreign companies registered in India

•Net profit will not include dividend income received from another Indian company following the provisions of the companies law or from profits of its own overseas branches

CSR Committee consisting of three or more directors, out of which at least one director shall be an independent

director

Unlisted public company or private company can have a committee without such an

independent director

A private company having only two directors on its boards shall constitute its committee with two such directors

For foreign company, committee should have at least two personsOne: Resident in India authorized to accept on behalf of the company service of process and any notices or other documents required to be served on the companyOther: nominated by the foreign company

CSR governance : CSR Committee

Role of CSR Committee and the board

Formulate and recommend a CSR policy

Recommend activities and amount of expenditure to be incurred

Monitor the policy from time to time

Constitute a CSR committeeApprove a CSR policy (indicating

the list of activities along with the expenditure) & publish the same in its report and on the website

Spend at least 2% of average net profit during the three immediately preceding financial years. If not, specify the reasons for not spending the amount

Ensure that the activities as are included in CSR policy of the company are undertaken by the company

CSR CommitteeCSR Committee

BoardBoard

CSR policy

Targeting

Schedule VII

Schedule VII

Schedule VII

Budget allocation

Implementation

Disclosure

•Display CSR activities on the website•Annual report on CSR

Disclosure

Reporting on CSR spendCSR project/activity identified

Sector in which the project is covered

Projects/ program

1) Local area or other2) State and district of the project/program

Project/ Program wise budget (Amount outlay)

Amount spent on the projects/programs

Sub heads1)Direct expense2) Overheads

Cumulative expenditure up to the reporting period

Amount spent direct or through implementation agencies

Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and

frameworkSetting M& E system

Source: UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific ) Publication

Business responsibility perspective

NVG perspective

Business Responsibility

Business Responsibility

Approaches for CSR Governance

Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and

frameworkSetting M& E system

Constitution of Board

Competencies of Independent Directors

No independent director shall hold office for more than two consecutive terms, but such independent director shall be eligible for appointment after the expiration of three years of ceasing to become an independent director

An independent director - neither himself nor any of his relatives is a Chief Executive or director, by whatever name called, of any nonprofit organisation that receives twenty-five per cent or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the company; or who possesses such other qualifications as may be prescribed

Role of CSR Committee and the board

Formulate and recommend a CSR policy

Recommend activities and amount of expenditure to be incurred

Monitor the policy from time to time

Constitute a CSR committeeApprove a CSR policy (indicating

the list of activities along with the expenditure) & publish the same in its report and on the website

Spend at least 2% of average net profit during the three immediately preceding financial years. If not, specify the reasons for not spending the amount

Ensure that the activities as are included in CSR policy of the company are undertaken by the company

CSR CommitteeCSR Committee

BoardBoard

Duties of the independent director

Evaluation of independent directors

Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and

frameworkSetting M& E system

Basic policy elements as per the companies act

Companies Act - an overviewPutting in perspectiveIndependent directorsSetting perspective and priority – formulating policy and

frameworkSetting M& E system

Performance management cycle

Source: Central government: Cost-effectiveness and improving annual reports,, Controller and Auditor General, New Zealand

Measuring performance and impact

Elements of M&E

For further clarification / guidance, email:

soumitra.ghosh@csopartners.org.in