Corporate Social Responsibility Policy

Background

Corporate Social Responsibility (“CSR”) is strongly connected with the principles of Sustainability; an organization should make decisions based not only on financial factors, but also on the social and environmental consequences. Corporates must recognize that their business activities have wide impact on the societies in which they operate.

This policy shall apply to all CSR initiatives and activities taken up at the various work‐centres and locations of Zerodha Capital Private Limited (hereinafter referred to as “the Company”), for the benefit of different segments of the society, specifically the deprived, underprivileged and differently abled persons.

The business philosophy and foundation of Zerodha Capital Private Limited is built on the strong belief of excellence in the areas of economic, social and environmental development. The thrust of the business ideology is to go beyond the deployment of financial resources and be catalyst in societal, entrepreneurial and technological change which is intertwined closely with creativity, innovation and responsibility. In line with its ideology, the company shall contribute and participate in the Corporate Social Responsibility ("CSR") projects which can bring significant development and change in the lives and development of the local community and society at large. 

Definitions

1. Act

“Act” means the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).

2. Corporate Social Responsibility

“Corporate Social Responsibility” or “CSR” means the activities undertaken by a Company in pursuance of its statutory obligation laid down in section 135 of the Act, but shall not include the following:
  • activities undertaken in pursuance of normal course of business of the company: Provided that any company engaged in research and development activity of new vaccine, drugs and medical devices in their normal course of business may undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for financial years 2020-21, 2021-22, 2022-23 subject to the conditions that-
    1. (a) such research and development activities shall be carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act;
    2. (b) details of such activity shall be disclosed separately in the Annual report on CSR included in the Board’s Report;
  • any activity undertaken by the Company outside India except for training of Indian sports personnel representing any State or Union territory at national level or India at international level;
  • contribution of any amount directly or indirectly to any political party under section 182 of the Act;
  • activities benefitting employees of the Company as defined in clause (k) of section 2 of the Code on Wages, 2019 (29 of 2019);
  • activities supported by the Company on sponsorship basis for deriving marketing benefits for its products or services; and
  • activities carried out for fulfilment of any other statutory obligations under any law in force in India.

3. Net Profit

Section 198 of the Act specifies certain additions/deletions (adjustments) to be made while calculating the net profit of a company (mainly it excludes capital payments/receipts, income tax, set-off of past losses).
Profit Before Tax (PBT) is used for computation of net profit under Section 135 of the Act.
As per Rule 2(1)(h) of the Companies (Corporate Social Responsibility) Rules, 2014 “net profit” means the net profit of a company as per its financial statement prepared in accordance with the applicable provisions of the Act, but shall not include the following, namely: -
  • Any profit arising from any overseas branch or branches of the Company, whether operated as a separate Company or otherwise; and
  • Any dividend received from other companies in India, which are covered under and complying with the provisions of section 135 of the Act: Provided that in case of a foreign company covered under these rules, net profit means the net profit of such company as per profit and loss account prepared in terms of clause (a) of sub-section (1) of section 381, read with section 198 of the Act;

4. CSR Expenditure

“CSR Expenditure” shall include all expenditure including contribution to corpus, or on projects or programs relating to CSR activities specified in this policy as approved by Board. Expenses on activities other than the ones prescribed in this policy will not be considered as a CSR Expenditure. Further, the CSR projects or programs or activities undertaken in India shall amount to CSR Expenditure only.

5. CSR Activities

The followings are the wide categories of the activities under which the Company may work to undertake CSR activities:
  • Eradicating hunger, poverty and malnutrition, promoting health care including preventive health care and sanitation [including contribution to the Swachh Bharat Kosh set-up by the Central Government for the promotion of sanitation] and making available safe drinking water.
  • Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.
  • Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.
  • Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water [including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga.]
  • Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;
  • Measures for the benefit of armed forces veterans, war widows and their dependents, [Central Armed Police Forces (CAPF) and Central Para Military Forces (CPMF) veterans, and their dependents including widows;]
  • Training to promote rural sports, nationally recognised sports, paralympic sports and Olympic sports
  • Contribution to the prime minister’s national relief fund or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund) or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women;
    1. (a) Contribution to incubators or research and development projects in the field of science, technology, engineering and medicine, funded by the Central Government or State Government or Public Sector Undertaking or any agency of the Central Government or State Government; and
    2. (b) Contributions to public funded Universities; Indian Institute of Technology (IITs); National Laboratories and autonomous bodies established under Department of Atomic Energy (DAE); Department of Biotechnology (DBT); Department of Science and Technology (DST); Department of Pharmaceuticals; Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH); Ministry of Electronics and Information Technology and other bodies, namely Défense Research and Development Organisation (DRDO); Indian Council of Agricultural Research (ICAR); Indian Council of Medical Research (ICMR) and Council of Scientific and Industrial Research (CSIR), engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).]
  • Rural development projects
  • slum area development. `slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.]
  • Disaster management, including relief, rehabilitation and reconstruction activities.]

6. Execution process

The implementation of the Company’s CSR programmes shall be through monetary contribution made to such institutions directly from the Company in its own name Zerodha Capital Private Limited.
The Company shall undertake its CSR activities in line with its Board approved Corporate Social Responsibility (CSR) Policy and shall be implemented directly by the Company.
The Company may also undertake CSR activities through any trust, society or Section 8 Company which is not established by the Company or Subsidiary or Associate Company, provided such trust, society or section 8 company is having an established track record of three years in undertaking similar programs or projects or where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act.
The Company may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR Committees of respective companies are in a position to report separately on such projects or programs.

7. Utilization of fund

The Company shall utilize at least 2 percent of the average net profit of the Company made during the last three (3) immediately preceding financial years in the CSR activities as enumerated above in this policy. In any case, if in any year company fails to spend such amount on CSR, the Board will, in its report made under Section 134 (3) (o) of Companies Act, 2013, specify the reasons for not spending the amount.

8. Surplus arising from CSR activity

Any surplus arising out of the CSR projects, programs or activities will not form part of the business profit of the Company and shall be treated in the following manner:
  • ploughed back into the same project;
  • shall be transferred to the Unspent CSR Account opened by the Company, from which the said amount shall be spent in pursuance of CSR policy and annual action plan on the Company; or
  • such surplus will be transferred to a Fund specified in Schedule VII to the Act, within a period of six months of the expiry of the financial year.

9. CSR Committee

As per Section 135 (9) where the amount to be spent by a company under sub-section (5) of Section 135 of the Companies Act, 2013 does not exceed fifty lakh rupees, the requirement under sub-section (1) of the said section for constitution of the Corporate Social Responsibility Committee shall not be applicable and the functions of such Committee provided under this section shall, in such cases, be discharged by the Board of Directors of such company.
As the amount to be spend under sub-section (5) of Section 135 of the Companies Act, 2013 constitution of the CSR Committee shall not be applicable to our Company.

10. Responsibilities of the Board

The responsibilities of the Board concerning CSR are as follows:
  • Approving CSR Policy of the Company
  • Disclosing the content of the policy in its report and placing the policy on the Company’s website in the manner prescribed under Section 135 of the Act.
  • Ensuring that the CSR activities are related to the activities, areas or subjects included in Schedule VII of the Act.
  • Ensuring that CSR projects included in the policy are undertaken by the Company
  • Ensuring that the Company spends, in every financial year, at least 2 percent of the average net profits made during the three immediately preceding financial years or such minimum budget as may be statutorily mandated under the law
  • Ensuring that reasons for not spending of earmarked amount are disclosed in the Board’s report in case the Company fails to spend such amount
  • Ensuring that the Company gives preference to the local areas around its operations for spending the amount earmarked for CSR projects
  • Ensuring that administrative overheads shall not exceed five percent of total CSR expenditure of the Company for the financial year.

11. Monitoring Mechanism

To ensure effective implementation of the CSR programs undertaken a monitoring mechanism will be put in place by the Company. The CSR committee will conduct impact studies on a periodic basis, about effectiveness of CSR Activity on the society. The progress of CSR programs under implementation will be reported to Board of Directors on an annual basis.

12. Reporting Mechanism

Any person as authorised by the Board of the Company will obtain feedback from beneficiaries about the programs and report to the Board of Directors, the feedback received from the beneficiaries of CSR Activity. Appropriate documentation of Company’s CSR Policy, annual CSR activities, executing partners, and expenditure entailed will be undertaken on a regular basis and the same will be available on the website of the Company. CSR initiatives of the Company will also be reported in the Annual Report of the Company containing particulars as specified in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

13. Adoption and Amendments to the Policy

The Board on its own and/ or as per the recommendations of the concerned persons can amend this Policy, as and when required. Any or all provisions of the CSR Policy would be subject to revision/amendment in accordance with the provisions of the Act thereunder on the subject, from time to time.
The Board of Directors of the Company (“Board”) has adopted a CSR policy at its meeting held on 20th December 2024.

14. Conclusion

Over the past years, we have established a foundational framework for economic, social and environmental initiatives, within the organization as well as outside. As a responsible human organisation, we are committed towards the above objective and are keen on developing a sustainable business model to ensure and activate our future growth.