Provisions of Corporate Social Responsibility under section 135 of Companies Act, 2013 are  amended vide Section 21 of Companies (Amendment) Act, 2019. Provisions of Section 21 Companies (Amendment) Act, 2019 will  come into force on such date as the Central Government may, by notification in the Official Gazette.

Extract of Changes in Section 135 of Companies Act, 2013 proposed by Section 21 of Companies (Amendment) Act, 2019

21. Amendment of section 135.

In section 135 of the principal Act,—

(a) in sub-section (5), —

(i) after the words “three immediately preceding financial years,”, the words “or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years,” shall be inserted;

(ii) in the second proviso, after the words “reasons for not spending the amount” occurring at the end, the words, brackets, figure and letters “and, unless the unspent amount relates to any ongoing project referred to in sub-section (6), transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year” shall be inserted;

(b) after sub-section (5), the following sub-sections shall be inserted, namely:—

“(6) Any amount remaining unspent under sub-section (5), pursuant to any ongoing project, fulfilling such conditions as may be prescribed, undertaken by a company in persuance of its Corporate Social Responsibility Policy, shall be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account, and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.

(7) If a company contravenes the provisions of sub-section (5) or sub-section (6), the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of such company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both.

(8) The Central Government may give such general or special directions to a company or class of companies as it considers necessary to ensure compliance of provisions of this section and such company or class of companies shall comply with such directions.”.

Companies (Amendment) Act, 2019

Changes from sub section 1 to 4

workings of CSR

Sub Section 5

Unspent Amount

Fine Imprisonment

Power of CG

Author Bio

More Under Company Law

8 Comments

  1. PRIYANK says:

    Suppose, a company has unspent CSR amount as on 31.03.2019, then whether it is required to comply with the aforesaid amendment by 30.09.2019 and deposit the amount to fund under Sch VII or will the amendment be applicable from 31.03.2020 and amt to be deposited by 30.09.2020 given that the amendment came from July 31, 2019 ie after end of FY 2018-19.

  2. Nityananda T S says:

    Can a private limited company contribute its share of CSR funds to a Section 25 company (formed to implement CSR activities) to fulfill its CSR obligation under the amended Company’s Act? Even though the Section 25 Company is its own sister company? Is this allowed?

    1. CS Vikram Sirohi says:

      General Circular No. 21/2014 of MCA dated June 18, 2014 clarifies that Contribution to Corpus of a Trust/ Society/ Section 8 companies etc. will qualify as CSR expenditure as long as :
      (a) the Trust/ Society/ Section 8 company etc. is created by Compnay exclusively for undertaking CSR activities.

      1. priyank says:

        section 21 of THE COMPANIES (AMENDMENT) ACT, 2019 through which amendments were brought in section 135 came into effect from the date of publication in the gazette and not 02.11.2018. Section 1 reads as follows:

        1. (1) This Act may be called the Companies (Amendment) Act, 2019.
        (2) The provisions of this Act, except sections 6, 7 and 8, clauses (i), (iii) and clause
        (iv) of section 14, sections 20 and 21, section 31, sections 33, 34 and 35, sections 37 and 38
        shall be deemed to have come into force on the 2nd day of November, 2018.
        (3) The provisions of sections 6, 7 and 8, clauses (i), (iii) and clause (iv) of section 14,
        sections 20 and 21, section 31, sections 33, 34 and 35, sections 37 and 38 shall come into force
        on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for these provisions and any reference in any such
        provision to the commencement of this Act shall be construed as a reference to the coming
        into force of that provision.

        1. Vikram says:

          Brother please read carefully, the section which are covered under Companies (Amendments) Act, 2013 is enforced from November, 2018, and the section 6, 7, 10,20,21,31,33,34,37,38 are not covered up under this act. And for your kind knowledge Section 135 is specifically covered up under the Amendment act, 2019 and enforced from Nov. 2018.

          1. Prasanna says:

            Following is my Query:

            Extract of the Amendment Act – “(3) The provisions of sections 6, 7 and 8, clauses (i), (iii) and clause (iv) of section 14,
            sections 20 and 21, section 31, sections 33, 34 and 35, sections 37 and 38 shall come into force
            on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for these provisions and any reference in any such
            provision to the commencement of this Act shall be construed as a reference to the coming
            into force of that provision.”

            Amendments to CSR is through Sec 21 of the Amendment Act.

            The Commencement Notifiication for said sections other than “SECTION 21” was issued on 14th August 2019 – making it effective from 15th August 2019.

            Section 21 of the Amendment Act is not yet notified and hence it is not applicable from 2nd November 2018. (Section 1 (2) clearly indicates the sections that would not be applicable from 2nd November 2018).

Leave a Comment

Your email address will not be published. Required fields are marked *