The MCA vide Notification having -F. No. CSR-05/3/2020-CSR-MCA dated, January 22, 2021 issued Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 to amend the certain rules in the Companies (Corporate Social Responsibility Policy) Rules, 2014, with effect from January, 22, 2021, in a following manner:
- Every entity specified therein, who intends to undertake any Corporate Social Responsibility (“CSR”) activity, shall register itself with the Central Government by filing the Form CSR-1 electronically with the Registrar, with effect from April 1, 2021, which shall not affect the CSR projects or programmes approved prior to it.
- An annual action plan of CSR policy shall be formulated and recommended to the Board by the CSR Committee in a prescribed manner.
- Administrative overheads shall not exceed 5% of total CSR expenditure of the company for the Financial Year (“F.Y.”). Further, 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 within a period of six months of the expiry of the financial year.
- Companies specified, can set off any surplus CSR expenditure against its CSR obligations for the succeeding three financial years, which was the defined time frame for an “ongoing project”
- Non-compliance with CSR provisions has been decriminalised by shifting such offences to penalty regime, while companies having CSR obligation below INR 50 lakhs have been exempted from constituting a CSR Committee.
- Company having a net worth of INR 500 crore or more, or turnover of INR 1,000 crore or more or a net profit of INR 5 crore or more are required to shell out at least 2% of their three-year annual net profit towards CSR activities in a F.Y.
- Company having average CSR obligation of INR 10 crore or more in the three immediately preceding F.Y., shall undertake impact assessment, through an independent agency, of their CSR projects having outlays of INR 1 crore or more, and which have been completed not less than 1 year before undertaking the impact study.
- The companies will have to display CSR activities on their website, to disclose the composition of the CSR Committee, and CSR Policy and Projects approved by the Board for public access.
- A new format for the annual report on CSR activities has been included in the board’s report for F.Y. commencing on or after April 1, 2020.
The Notification can be accessed at: http://egazette.nic.in/WriteReadData/2021/224640.pdf