Amendment in the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 by the Ministry of Corporate Affair vide Notification dated 22.01.2021 as follows:

Rule 4. CSR Implementation

  • Registration of CSR Entity: Every entity which intends to undertake any CSR activity, shall register itself with the Central Government by filing the form CSR – 1 electronically with the Registrar, with effect from the 01st day of April 2021.For the new projects taken w.e.f. 1st April 2021.

Provided that the provisions of this sub-rule shall not affect the CSR projects or programmes approved prior to the 01st day of April 2021

  • Collaboration of other Companies 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.
  • Certification by CFO of Finance head: The Board of a company shall satisfy itself that the funds of CSR have been utilized 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.
  • CSR Committee shall formulate the Annual Action Plan: The CSR Committee of the Company shall formulate and recommend to the Board, an annual action plan in pursuance of its CSR policy, which shall include following:
    • the list of CSR projects or programmes that are approved to be undertaken in areas or subjects specified in Schedule VII of the Act;
    • the manner of execution of such projects or programmes;
    • the modalities of utilization of funds and implementation schedules for the projects or programmes;
    • monitoring and reporting mechanism for the projects or programmes;
    • details of need and impact assessment, if any, for the projects undertaken by the company .

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

Rule 7. CSR Expenditure

  • Administrative Overheads: The board shall ensure that the administrative overheads shall not exceed five percent of total CSR expenditure of the company for the financial year.
  • Transfer Unspent CSR Amount: 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.
  • Set off of Expenses Expenditure of CSR: Where a company spends an amount in excess of requirement provided under subsection (5) of section 135, such excess amount may be set off against the requirement to spend under subsection (5) of section 135 up to immediate succeeding three financial years subject to the conditions that –
    • the excess amount available for set-off shall not include the surplus arising out of the CSR activities if any,
    • the Board of the company shall pass a resolution to that effect.
  • CSR on Creation/acquisition of asset: 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.

Rule 8 CSR Reporting

  • Reporting in Board Report: Board’s Report of a company covered under these rules pertaining to any financial year shall include an annual report on CSR containing particulars specified in Annexure I or Annexure II, as applicable
  • CSR Impact Assessment: Every company having average CSR obligation of Rs. 10 Crores or more in pursuance of subsection (5) of section 135 of the Act, in the three immediately preceding financial years, shall undertake impact assessment, through an independent agency, of their CSR projects having outlays of one crore rupees or more, and which have been completed not less than one year before undertaking the impact study. The impact assessment reports shall be placed before the Board and shall be annexed to the annual report on CSR.

Rule 9 Display of CSR activities on its 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.

Rule 10 Transfer of unspent CSR amount.

Until a fund is specified in Schedule VII for the purposes of subsection (5) and(6) of section 135 of the Act, the unspent CSR amount, if any, shall be transferred by the company to any fund included in schedule VII of the Act.”

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Company: Rajnish Kumar & Associates
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March 2021