January 25, 2021
Summary of the notifications issued by MCA on 22/01/2021
MCA amends Corporate Social Responsibility (CSR) Rules, 2014
Key highlights of the amendment are as follows:
1. Definitions: Key Terms such as, ‘Administrative Overheads’ and ‘Ongoing Project’, duration of which is capped upto 3 years excluding the year of commencement of the project, are now defined
2. CSR Registration Number: Every entity 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; this, however, shall not affect the CSR projects or programmes approved prior to the 01st day of April 2021
3. CFO Certification: Chief Financial Officer or the person responsible for financial management shall certify the funds so disbursed have been utilised for the purposes and in the manner as approved by the Board
4. Annual Action Plan: CSR Committee shall formulate and recommend to the Board, an annual action plan in pursuance of its CSR policy, comprising the list of activities to be undertaken, modalities of fund utilization, monitoring and reporting mechanisms for the projects etc.
5. Set off of Excess Amount Spent: Excess amount spent over and above the mandated spend, excluding the surplus arising out of CSR activities, may be set off up to immediate succeeding three financial years, provided a resolution to that effect is passed by the Board.
6. Utilisation of CSR for creation/acquisition of capital assets: CSR amount may be spent by a company for creation or acquisition of a capital asset, which shall be held by the entity with CSR Registration Number/ the beneficiaries of the CSR Project/Public Authority.
7. Impact Assessment Report: Every company having average CSR obligation of ten crore rupees or more 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, which shall form part of Annual Report.
8. Booking CSR Expenditure: A company that undertakes Impact Assessment study, may book the expenditure towards Corporate Social Responsibility for that financial year, which shall not exceed five percent of the total CSR expenditure for that financial year or fifty lakh rupees, whichever is less.
9. ransfer of Unspent 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.
10. Revised format of the ‘Annual Report on CSR Activities’ to be included the Board’s Report for Financial Year commencing on or after 1st April, 2020 has been notified.
MCA notifies the commencement of specified sections in the Companies (Amendment) Act, 2019 and Companies (Amendment) Act, 2020
MCA has notified commencement of amendments made to various sections vide Companies (Amendment) Act, 2019 and Companies (Amendment) Act, 2020 including provisions related to CSR, definition of listed entities, further issue of share capital, exempt any class of persons by the Central Government from complying with the requirements of declaration of beneficial interest if considered necessary in public interest.
These notifications are available for reference on our free to use website www.ca2013.com for your quick reference.