CSR Amendment Rules 2021

CSR 2021

Decoding the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021

 

  • The Ministry of Corporate Affairs (MCA) vide its notification dated 22nd January, 2021 has released the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 aiming to amend the Companies (Corporate Social Responsibility Policy) Rules, 2014.
  • As per the new provisions, every entity that intends to undertake any CSR activity shall register itself with the Central Government by filing the form CSR-1 electronically with the Registrar of Companies, with effect from April 1, 2021.
  • The entity shall electronically sign and submit FormCSR-1, which shall be duly verified digitally by a Chartered Accountant in practice or a Company Secretary in practice or a Cost Accountant in practice.
  • On the submission of the Form CSR-1 on the portal, a unique CSR Registration Number shall be generated by the system automatically
  • A company may engage international organisations for designing, monitoring and evaluation of the CSR projects or programmes as per its CSR policy as well as for capacity building of their own personnel for CSR.
  • A company may also collaborate with other companies for undertaking projects or programmes 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 programmes in accordance with these rules.
  • Further, MCA clarified that the Board of Directors of the Company shall mandatorily disclose the composition of the CSR Committee, and CSR Policy and Projects approved by the Board on their website, if any, for public access.
  • The board shall ensure that the administrative overheads shall not exceed five percent of total CSR expenditure of the company for the financial year.
  • The Board’s Report of a company covered under these rules pertaining to any financial year shall include an annual report on CSR containing particulars including projects approved, amount spent, unspent, amount available for set-off from preceding year and the following year, ongoing projects and other projects., and the breakup of amount spent per project, administrative overheads, impact assessment etc.,.
  • However, 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.
  • With this amendment coming into force, the Companies will have to state the reasons for not spending the amount for CSR and also will have to transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year.

CS Renu Wadekar,
Practicing Company Secretary
+91 95372 04838

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