On January 22, 2021, the Government of India brought into effect the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021. The Rules amended the exiting Companies (Corporate Social Responsibility Policy) Rules, 2014.<\/p>\n
Corporate Social Responsibility (Rule 2)<\/strong><\/p>\n The Amendment modifies the definition of Corporate Social Responsibility (CSR) in order to include an exception to the activities which do not come under the ambit of CSR and are undertaken in pursuance of normal course of business of the company i.e. 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-<\/p>\n CSR Implementation (Rule 4)<\/strong><\/p>\n The Amendment modifies the CSR implementation provided under Rule 4 and states that a Company can undertake CSR activities by itself or through any (a) company incorporated under Section 8 of the Act; (b) registered pubic trust; (c) registered society under Sections 12A and 80G of the Income Tax Act, 1961; (d) any entity established under an Act of Parliament or a State legislature; or (e) any company incorporated under Section 8 of the Act, registered pubic trust, registered society under Sections 12A and 80G of the Income Tax Act, 1961 which has an established track record of at least three years in undertaking similar activities.<\/p>\n It also provides that every entity that needs to undertake any CSR activity will have to register itself with the Central Government. These entities would be required to fill the CSR-1 Form electronically with the Registrar of Companies from April 1, 2021.<\/p>\n As per the amendment, the Board of a company must satisfy itself that the funds so disbursed have been utilised for the purposes and in the manner as approved by it and the Chief Financial Officer or the person responsible for financial management shall certify to the effect.<\/p>\n CSR Committee (Rule 5)<\/strong><\/p>\n The Amendment provides that the CSR Committee must formulate and recommend to the Board, an annual action plan in pursuance of its CSR policy provided that Board may alter such plan at any time during the financial year, as per the recommendation of its CSR Committee, based on the reasonable justification to that effect.<\/p>\n CSR Expenditure (Rule 7)<\/strong><\/p>\n The amendment provides any surplus arising out of the CSR activities shall not form part of the business profit of a company and shall be ploughed back into the same project or shall be transferred to the Unspent CSR Account and spent in pursuance of CSR policy and annual action plan of the company or transfer such surplus amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year.<\/p>\n The amendment provides that companies can set off CSR expenditure above the required two per cent expenditure in any financial year against the required expenditure for up to three financial year on following conditions:<\/p>\n The CSR amount may be spent by a company for creation or acquisition of a capital asset, which shall be held by a company established under section 8 of the Act, or a Registered Public Trust or Registered Society, having charitable objects and CSR Registration Number or beneficiaries of the said CSR project, in the form of self-help groups, collectives, entities or a public authority.<\/p>\n CSR Reporting (Rule 9)<\/strong><\/p>\n The amendment modifies the CSR reporting mechanism to include an annual report on CSR by the Board. In case of a foreign company, the balance sheet filed under Section 381 of the Act, must contain an annual report on CSR containing particulars specified in Annexure I or Annexure II.<\/p>\n On January 22, 2021, the Government of India brought into effect the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021. The Rules <\/p>\n","protected":false},"author":8808,"featured_media":243483,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,15],"tags":[8891,45077,45076],"class_list":["post-243477","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legislationupdates","category-rules_regulations","tag-corporate-social-responsibility","tag-csr-expenditure","tag-csr-reporting"],"yoast_head":"\n\n
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