CSR Amendment Rules, 2021; Structuring Corporate Responsibility

by Abha Kashyap Managing Patner

Recently, the Ministry of Corporate Affairs (MCA) brought in changes to the existing Companies (Corporate Social Responsibility) Rules, 2014. Under the said CSR Amendment Rules, 2021, it is mandatory for an entity which wants to undertake any CSR activity to file Form CSR-1 electronically with the Registrar with effect from April 01, 2021. A unique CSR Registration number will be generated and allotted to the Companies automatically. The amendment lays down the rules pertaining to CSR Committee formulation and recommendation of action plan for the CSR Policy to the Board.

The Board has to ensure that the administrative overheads don’t exceed five percent of total CSR expenditure of the company.

A noteworthy amendment has been brought under Rule 7(2) wherein it has been categorically mentioned that any surplus out of the CSR activities will not be considered as the business profit of the company. The said surplus has to be returned to same project or has to be transferred to unspent CSR Account (spending it in accordance with the CSR Policy and annual action plan of the policy) or to be transferred in a fund mentioned in Schedule VII of the Companies Act, 2013. The said surplus has to be transferred within a period of six months of the expiry of the financial year.

The amendment Rules also include a format for the annual report on CSR activities. Under Rule 9 of the amended Rules, it is mandatory for the Board of Directors to disclose the composition of CSR Committee, CSR Policy and Projects on the Company’s website for the public access.

Please find link of the rules here... http://bit.ly/CSRAmendmentRules

Originally posted on www.kpalegal.com on 30th Jan 2021