Presentation

on Corporate social Responsibility

Recent Amendments

Presentation by
Abhishek Pareek
 INDEX
 Concept of CSR
 Background
 CSR Policy Amendment Rules, 2021
 Definitions
 CSR Implementation
 Registration of Implementation Agency (CSR – 1)
 Board Responsibility and CFO Certification
 CSR Committee
 CSR Expenditure
 Treatment of Unspent CSR Amount
 Concept of Creation/Acquisition of Capital Asset
 CSR Reporting and Concept of Impact Assessment
 Display of CSR Activities on website
 Penal provisions u/s 135 (7) of CA, 2013
 Concept of CSR
 Section 135(1) of the Companies Act, 2013 requires to
constitute CSR Committee by the Company having

having Net Turnover of

worth of Rs. or Rs. 1000 cr.
500 cr. or or more
more or
Net profit of Rs.
5 cr. or more

Shall constitute CSR committee of the board consisting of 3

or more directors, out of which 1 shall be Independent
director.

Section 135(5) of the Act, 2013, provides that The Board shall
ensure that Company spends in every financial year at least
2% of Avg. net profit of the co. made during the 3
immediately preceding financial years or in case where co.
has not completed 3 financial years since its incorporation,
during such immediately financial years.
 Background

The Companies (Amendment) Act, 2020 has amended the provisions of section
135 of Companies Act, 2013 relates with CSR. MCA notified these amendments
vide notification dated 22nd January, 2021. MCA has also notified on the same
date 22nd January, 2021 Companies (CSR Policy) Amendments ,Rules, 2021

Amendment Act, 2020 provides if the Companies Spends amount in

excess of the requirement under section 135, may set off such excess
amount against the requirement to spend on CSR under section 135(5)
subject with rules made there under.

Pursuant with the Amendment, there are Changes in penal provisions for
non compliance of CSR provisions from comply or explain to comply or
suffer.

Further the Amendment Act, 2020 introduced a new sub section (9) of
Section 135 of CSR which provides that if the amount to be spent by a
company under section 135(5) does not exceed 50 lakh rupees,
requirement to constitute CSR Committee under section 135(1) shall not
be applicable.
The BOD shall discharge functions of CSR committee in that such cases.
Companies (Corporate Social Responsibility
Policy) Amendment Rules, 2021

 Definitions
Pursuant with theses amendments Insertion of new/ amendments in
definitions are as follows:

 Administrative
Overhead
The expenses incurred by the company for general
management and administration of CSR functions in the
company but shall not include the expenses directly incurred
for :
 Designing
 Implementation Administrative O/H shall not
exceed 5 % of total CSR
 Monitoring &
Expenditure of the company for
 Evaluation the FY.
of particular CSR project or programme.
 Corporate Social Responsibility

 Means activities undertaken by company in pursuance of its

statutory obligation laid down under section 135 of the Act in
accordance with these rules , 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-

(a)such research and development activities shall be

carried out in collaboration with any of the institutes
or organizations mentioned in item (ix) of Schedule
VII to the Act;
(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 companies on sponsorship basis for deriving

marketing benefits for its products or services.

 activities carried out for fulfilment of any other statutory obligations under
any law in force in India;
Activities
Activities carried undertaken in
out for fulfillment normal course Activities
of any statutory of business undertaken
obligation under o/s India
any law in force
in India

Activities not
included in CSR
Contribution of
Sponsorship any amount to
activities by any political
companies for Activities party u/s 182
deriving market benefitting to of the Act.
benefits for its employees of
products / the company
services
 CSR Policy

Means a statement containing the approach and direction given by

Board of company, taking into account the
 recommendation of its CSR committee &
 includes guiding principles for
 Selection
 Implementation &
 Monitoring of activities, as well as
 formulation of annual action plan

 International Organisation

means an organisation notified by the Central Government as an international

organisation under section 3 of the United Nations (Privileges and Immunities)
Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act
apply;

The government
. has allowed the International organisation for
designing, monitoring and evaluation of the CSR project or
programme.
 Ongoing Project

Whose Duration is but not exceeding

more than 1 year 3 years

a multi
year
project

a project that was not initially approved as

multi year project but Board extended its
jurisdiction beyond 1 year with justification
 CSR Implementation

Rule 4 of CSR Policy Rules, 2014 substituted under CSR policy Rules, 2021
focusing on who shall undertake CSR activities:

By company itself or
through
Implementing
agencies

Section 8 co. or
Or any entity Registered public trust or
established under an
Act of Parliament or Registered society u/s 12A or
State Legislature 80G of IT Act. 1961
Established by the co. either
singly or along with any other
co.

Section 8 co. or
Registered Public Trust or
Section 8 co.
Registered Society u/s 12A or
Registered trust or 80G of IT Act, 1961
Registered society Having a track record of min. 3
established by CG/SG. years in undertaking similar
activities
 Registration of entity (Implementing agency) with Central
government

Every entity who intends to undertake any CSR activity shall register itself with
CG by filing e-form CSR-1 with ROC w.e.f. 01st April, 2021
• Provided, it shall not affect CSR projects or programmes approved prior to 01st April,
2021

On submission of form CSR -1, a unique CSR registration no. generated by the
system automatically.

• Form CSR -1shall be signed and submitted by entity & verified digitally by a
CA/CS/CMA in practice

A company may engage an International organisation for designing,

monitoring and evaluation of its CSR projects or programmes as per its CSR
policy as well as for capacity building for their own personnel for CSR.

A company may also collaborate with other companies for undertaking

projects or programmes or CSR activities in such manner that CSR committees
of respective companies are in a position to report separately on such project
in accordance with these rules.
 Responsibility of Board and Certification by CFO

 The Board of a company shall monitor and 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

 In case of ongoing project, the Board of a Company shall

 monitor the implementation of the project with reference to the
approved timelines and year-wise allocation and
 shall be competent to make modifications, if any, for smooth
implementation of the project within the overall permissible time
period

Certificate of
CSR report shall
disbursement by
form part of
CFO or person
Board report
responsible.
 CSR Committee

 CSR committee shall formulate and recommend to the Board an

Annual Action Plan in pursuance of its CSR policy which shall include
the following namely:

List of CSR projects

or programmes that  Section 135(9) of CA,
are approved to be 2013 provides that if
undertaken in areas the amount to be
or subjects specified spent by a company
in schedule VII of under section 135(5)
the Act. does not exceed 50
Details of lakh rupees,
need and
impact Manner of  requirement to
assessment , if Provided that Board may execution of constitute CSR
any alter such plan at any such projects Committee under
section 135(1) shall
undertaken by time during the financial
not be applicable.
the company. year as per the
recommendation of CSR
 The BOD shall
committee subject with discharge functions of
justification. CSR committee in that
Mode of
such cases
Monitoring and utilisation of
reporting funds &
mechanism for the implementation
projects or schedules for the
programmes projects or
programmes
 CSR Expenditure

 The board shall ensure that the administrative overheads shall not
exceed five percent of total CSR expenditure of the company for the
financial year.
 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

Any surplus arising out of

shall be transferred to the transfer such surplus
the CSR activities shall
not form part of the or Unspent CSR Account
or
amount to a Fund
and spent in pursuance specified in Schedule
business profit of a
of CSR policy and annual VII, within a period of 6
company and shall be
action plan of the months of the expiry of
ploughed back into the
company the financial year
same project
 CSR Expenditure

Excess
amount
spends

 Where a company spends an amount in excess of requirement

provided under section 135(5) , such excess amount may be set off
against the requirement to spend under of section 135(5) up to
immediate succeeding three financial years subject to the conditions
that – (i) the excess amount available for set off shall not include the
surplus arising out of the CSR activities, if any, in pursuance of sub-rule
(2) of this rule. (ii) the Board of the company shall pass a resolution to
that effect.
up to immediate
Such excess amount
A co. spends amount succeeding 3
may be set off against
in excess of financial years
requirement to spend
requirement u/s subject to the
u/s 135(5)
135(5) conditions that:

 the excess amount available for set off shall not include
the surplus arising out of the CSR activities

 the Board of the company shall pass a resolution to that

effect.
 Treatment of Unspent Amount

Project

Not relating to Ongoing

Ongoing project Porject

Unspent amount relating to ongoing project

shall be transferred to a special a/c USCRA w/i Such unspent
30 days from the end of financial year. And amount shall be
Such unspent amount shall be spent by the co. transferred to fund
towards their CSR Obligation as per CSR Policy specified under
within 3 FY form date of such transfer schedule VII w/i a
period of 6 months
Failing which, company shall transfer the same from end of financial
to fund specified under schedule VII within 30 year
days from the date of completion of 3rd FY.
 Concept of Creation/Acquisition of Capital Asset

The CSR amount may be spent by a company for

creation or acquisition of a capital asset, which shall be
held by

A section 8 co. or Beneficiaries of the said CSR

Registered Public Trust or a project, in the form of self- a public
Registered Society having a help groups, collectives, authority
charitable object & CSR entities; or
Registration number; or

Provided that any Capital Asset created by a co. prior to

commencement of Companies CSR Policy (Amendment) Rules, 2021

Shall w/i a period of180 days form the commencement

comply with requirement of this rules

Which may be extended by a further period of not more than 90 days

with approval of Board subject with a reasonable justification
 CSR Reporting and Concept of
Impact Assessment

 The Board Report of a company include an Annual Report on

CSR containing specified particulars and there is additional
disclosures under Annexure II are as follows:
 Impact Assessment
 Amount available for set off
 CSR amount spent against ongoing project or other than
ongoing project
 Administrative O/H .

 In case of Foreign company B/S prepared filed u/s 381 of the

Act, shall contain an annual report on CSR as specified.

 The impact assessment reports shall be placed before the

Board and shall be annexed to the annual report on CSR
 Concept of Impact Assessment

Shall undertake
Company having IMPACT
In the 3 immediately
Average CSR ASSESSMENT
preceding financial
Obligation of Rs. 10 cr. through an
year
or more u/s 135(5) Independent
Agency

Q. Which
project?

And which have been

CSR project having outlay completed not less than 01
of Rs. 01 Crore or more year before undertaking the
Impact study
 Concept of Impact Assessment

Impact
Assessment
Expenditure

Maximum 5% of
Total CSR
A company may expenditure foe
book the that financial year
expenditure
towards CSR for OR
that Financial year Rs. 50 Lakhs
Which ever is less
 Display of CSR Activities on website

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.

Penal provisions

If a company is in default in complying with the provisions of

sub-section (5) or sub-section (6), the company shall be liable
to a penalty of twice the amount required to be transferred by
the company to the Fund specified in Schedule VII or the
Unspent Corporate Social Responsibility Account, as the case
may be, or one crore rupees, whichever is less, and every
officer of the company who is in default shall be liable to a
penalty of one-tenth of the amount required to be transferred
by the company to such Fund specified in Schedule VII, or the
Unspent Corporate Social Responsibility Account, as the case
may be, or two lakh rupees, whichever is less.