Finetuning CSR ecosystem
Bhumesh Verma
International Corporate Lawyer | M&A | Foreign Investments | Contracts | Managing Partner @Corp Comm Legal | Adjunct Professor | Solution Provider
CSR has become the buzzword in India for last few years with profitable corporates having to deploy a part of their profits towards betterment of the society. This used to be done voluntarily by some Indian corporate houses but the volume and scope has widened after the Central government made it mandatory through legislation.
The government keeps monitoring the progress and impediments in implementation of prescribed CSR regime and keeps finetuning it from time to time.
In the latest attempt to put funds which are part of corporate social responsibility (CSR Funds) to good use – Central government has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014, to bring in some changes.
Thesechanges include the following:
a)???Unused CSR funds: If any CSR funds of a company are not spent and laying in the Corporate Social Responsibility Account unused – Then such company has to form a CSR committee to spend such unused funds in accordance with CSR norms.
b)???Procedure to perform CSR activities: Any company which is obligated to allocate certain funds towards CSR, it shall need to perform CSR activities by itself or through:
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(i) a company which is established under section 8 of the Companies Act, 2013 or a registered public trust or a registered society, either on its own or in coordination with another company; provided such company, trust or society is approved under section 80G of Income Tax, Act, 1961. Also it may perform CSR activities through aforesaid company, trust or society established by central or state government.
(ii) any entity established under an Act of Parliament or a State legislature.
c) New report format: ?For reporting CSR activities a new format is introduced which needs to be included with annual report of board.
d) Impact assessment: Companies undertaking impact assessment on any environment related issues and challenges may register such expenditure under CSR to a tune of 2% of total CSR funds or 50lakhs whichever is higher. Earlier the same was 5% of total CSR funds or 50lakhs whichever is less.
These changes are likely to bring about more clarity and ease in operation of the CSR ecosystem. ?
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