Guide to Companies Act: Section 135

Introduction

The idea of corporate social responsibility, or CSR, has become more important in India’s corporate commercial law. Section 135 of the Companies Act of 2013 requires companies to invest a minimum of 2% of their net earnings in corporate social responsibility initiatives. The Companies Act of 2013’s CSR rules apply to companies that fulfill specific requirements. In this blog, we will review Section 135 of the Companies Act, 2013 comprehensively, along with the CSR provisions, amendment rules, and other relevant details.

What does  Section 135 of Companies Act mean?

 Section 135 of the Companies Act, 2013 addresses corporate social responsibility (CSR) . It requires companies that meet specific revenue levels to engage in corporate social responsibility (CSR) initiatives and to allocate a minimum of 2% of their net income from the previous three years to these endeavors. All companies that meet the required thresholds for net worth, turnover, or net profits need to form a CSR committee and adhere to CSR regulations. Companies that have incorporated under Section 8 of the Companies Act, 2013 for charity purposes must also abide by the provisions of CSR.

Know CSR Provisions under  the 2013 Companies Act

Companies are required by Section 135 of the Companies Act, 2013 to allocate at least 2% of their net profit to corporate social responsibility initiatives. The CSR provisions under Section 135 are as follows:

CSR Amendment Rules, 2022

New guidelines for the CSR Amendment Rules were announced in 2022 by the Ministry of Corporate Affairs. According to the amendment, companies can execute CSR on their own through another company created by Section 8 of the Companies Act, a registered public trust, a registered society founded by the company, the Central Government, or a state.

Companies CSR Policy Rules 2014    

To guide companies when creating their CSR policies, CSR Policy Rules were introduced in 2014. The following are the significant provisions under the Company’s CSR Policy Rules:

• The CSR policy of a company governed by Section 135 must be approved by the board of directors.
• In its annual board report, the company is required to reveal the details of its policy.
• The company is required to publish information about its CSR initiatives on its website.

Know the Process for filing Form CSR1

The Form CSR1 can be filed online on the MCA portal.

Step 1: 1To download the Form CSR-1rm CSR-1 online, log in to the MCA Portal.

Step 2: A fillable PDF version of Form CSR-1 will be accessible.

Step 3: The Form CSR-1 shall be digitally signed by

• • In  Section 8 of a company, any director who is not disqualified by the Companies Act of 2013.
  • If registered public trust: one of the Trustees or CEO.
  • If a society is registered: Chief Executive Officer/Secretary.
  • If the organization was founded by a state legislature or parliamentary act, an authorized agent acting on their behalf.

Step 4: The form must also be digitally confirmed by a full-time practicing chartered accountant, company secretary, or cost accountant.

Step 5: Document uploading would be the next step after signing.

Step 6: An SRN will be generated following the successful upload of the documents and submission. For all future communications with MCA, this SRN will be used.

Step 7: Following a successful submission, a challan with details of the applicant’s fee payments will be generated.

Step 8: Finally, an automatic CSR registration number will be generated, and a letter of approval will be mailed to the company’s official mail address.

Conclusion:

Section 135 of Companies Act, 2013  mandates companies to devote at least 2% of their net profit to corporate social responsibility initiatives. Companies that meet specific criteria are subject to the provisions outlined in this section. In 2022, the Ministry of Corporate Affairs published updated guidelines on the CSR Amendment Rules, enabling companies to implement CSR on their own or through another company established by Section 8 of the Companies Act, a registered public trust, a registered society founded by the company, the Central Government, or a state. To help companies create their CSR policies, the Company CSR Policy Rules were formulated in 2014. As corporate citizens, companies must abide by these rules and support social and environmental issues.