CSR Committee Composition: When It Is Mandatory (2026)

By SCORE Editorial Team · Prepared by SCORE’s audit, tax and advisory practice · Law stated as on 10 August 2026

Quick answer: CSR committee composition depends on the company. Listed companies and public companies that need independent directors must have three or more directors, with at least one independent. Others need two or more directors. No committee is needed if the CSR obligation is ₹50 lakh or less, unless the Unspent CSR Account holds a balance.

When is a CSR committee mandatory?

Every company covered by Section 135(1) of the Companies Act, 2013 must constitute a CSR Committee of the Board. A company is covered if, in the immediately preceding financial year, it had any of these:

• net worth of ₹500 crore or more;
• turnover of ₹1,000 crore or more; or
• net profit of ₹5 crore or more.

There are two exceptions to the committee requirement, and one exception to the exception.

Situation	CSR Committee needed?
Covered by Section 135(1), CSR obligation above ₹50 lakh	Yes
Covered, obligation ₹50 lakh or less, no Unspent CSR Account balance	No. The Board performs the committee’s functions (Section 135(9))
Covered, obligation ₹50 lakh or less, but any balance in the Unspent CSR Account	Yes, under the 20 September 2022 amendment to the CSR Rules
Not covered by Section 135(1) this year	No

The CSR obligation is 2% of the average net profit of the three immediately preceding financial years. That figure, not turnover, drives the ₹50 lakh test.

What is the required CSR committee composition?

The base rule in Section 135(1) is three or more directors, at least one of them independent. The statute and Rule 5(1) of the Companies (CSR Policy) Rules, 2014 then relax it for smaller structures.

Type of company	Minimum CSR committee composition
Listed company	Three or more directors, at least one independent
Unlisted public company required to appoint independent directors	Three or more directors, at least one independent
Unlisted public company or private company not required to appoint an independent director	Two or more directors; no independent director needed
Private company with only two directors	Those two directors
Foreign company	At least two persons: the authorised representative under Section 380(1)(d) and one person nominated by the foreign company

Which unlisted public companies need independent directors?

Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 decides this. An unlisted public company needs at least two independent directors if it has any of these:

• paid-up share capital of ₹10 crore or more;
• turnover of ₹100 crore or more; or
• outstanding loans, debentures and deposits above ₹50 crore.

Joint ventures, wholly owned subsidiaries and dormant companies are exempt. A company that has not met any threshold for three consecutive years can also drop the requirement. If none of this applies, the CSR committee needs no independent director.

What does the CSR committee do?

Section 135(3) and Rule 5(2) give the committee four core tasks.

1. Formulate and recommend the CSR policy to the Board. The policy indicates the Schedule VII activities the company will undertake.
2. Recommend the annual action plan. It lists approved projects, the manner of execution, fund-use modalities and schedules, monitoring and reporting, and any need and impact assessment.
3. Recommend the amount to be spent on CSR in the year.
4. Monitor the CSR policy from time to time.

The Board can alter the annual action plan during the year. It must act on the committee’s recommendation and record a reasonable justification.

What remains the Board’s responsibility?

The committee recommends. The Board decides and stays accountable. Whether or not a committee exists, the Board must:

• approve the CSR policy and the annual action plan;
• disclose the policy in the Board’s Report and on the company’s website;
• ensure the company spends at least 2% of average net profit, or transfers the shortfall on time;
• satisfy itself on fund utilisation, backed by a CFO certificate (Rule 4(5));
• monitor ongoing projects against timelines and year-wise allocations (Rule 4(6)); and
• publish the committee’s composition, the CSR policy and approved projects on the website (Rule 9).

The annual report on CSR, annexed to the Board’s Report, also discloses the committee’s composition.

When can the Board discharge the CSR committee’s functions?

Section 135(9) removes the committee requirement where the amount to be spent does not exceed ₹50 lakh. The Board then performs every function of the committee directly. That includes recommending and approving the policy and annual action plan.

Reassess this every year. Two things can switch the committee requirement back on:

• A profit jump. If the obligation crosses ₹50 lakh, the committee must be constituted for that year.
• An Unspent CSR Account balance. Any amount sitting in that account triggers the committee requirement, even if this year’s obligation is small.

A company may also choose to keep a committee below ₹50 lakh. That is good practice if the CSR programme is complex.

How often should the CSR committee meet?

The law sets no meeting frequency or special quorum for the CSR committee. Most companies follow their committee charter and the ICSI Secretarial Standard on Board meetings (SS-1), which also covers committee meetings.

Quarterly meetings work well in practice. They line up with milestone-based fund releases and quarterly monitoring reports.

CSR committee setup checklist

• ☐ Section 135(1) applicability tested on last year’s audited figures
• ☐ CSR obligation computed and compared with the ₹50 lakh limit
• ☐ Unspent CSR Account balance checked
• ☐ Independent director requirement checked under Rule 4 of the Appointment Rules
• ☐ Committee constituted by Board resolution, with members named
• ☐ Written charter covering meetings, quorum, agenda and reporting
• ☐ Composition disclosed on the website and in the CSR annual report
• ☐ Annual action plan recommended before the year’s spending starts
• ☐ Quarterly monitoring pack: project progress, fund releases, utilisation certificates

Good practice beyond the legal minimum

• Invite someone with field or social-sector experience as a permanent invitee.
• Review agency due diligence and each fund release, not just year-end totals.
• Track ongoing projects separately, with year-wise budgets and timelines.
• Minute the reasons for every change to the annual action plan.

Frequently asked questions

Is a CSR committee mandatory for every company covered by Section 135?

Yes, unless the CSR obligation is ₹50 lakh or less. In that case the Board performs the committee’s functions under Section 135(9). The exemption is lost if the company has any balance in its Unspent CSR Account.

Is a CSR committee mandatory for a private company?

Yes, if the private company is covered by Section 135 and its obligation is above ₹50 lakh. It needs at least two directors on the committee. A private company with only two directors can constitute the committee with those two.

Must the CSR committee include an independent director?

Only where the company is listed or must appoint independent directors. Unlisted public companies need them above ₹10 crore paid-up capital, ₹100 crore turnover or ₹50 crore borrowings. Other companies can have a committee of two or more directors without one.

What is the CSR committee composition for a foreign company?

A foreign company’s CSR committee needs at least two persons. One is the person authorised under Section 380(1)(d) to accept service on its behalf. The foreign company nominates the other.

How often should the CSR committee meet?

The Companies Act sets no minimum frequency. Quarterly meetings are good practice. They allow the committee to monitor projects and approve fund releases on time.

Who approves the CSR annual action plan?

The CSR committee formulates and recommends it, and the Board approves it. Where no committee is required, the Board prepares and approves the plan itself.

How SCORE helps

SCORE tests each year whether your company needs a CSR committee and who must sit on it. We draft committee charters, constitution resolutions and annual action plans. We also prepare quarterly monitoring packs from project data.

Not sure your CSR governance is in order? Book a CSR governance review with SCORE.

Sources

• Ministry of Corporate Affairs – CSR
• Companies Act, 2013 and rules (India Code)
• National CSR Portal (Ministry of Corporate Affairs)

This article is general information, not professional advice.