The Ministry of Corporate Affairs (MCA) amended the Companies (Corporate Social Responsibility Policy) Rules, 2014 in accordance with the authority granted under Section 135 and Subsections (1) and (2) of Section 469 of the Companies Act, 2013 (18 of 2013).
Objective: To calculate the cost of conducting social impact assessments of Corporate Social Responsibility (CSR) activities and the procedure for handling unspent CSR funds of companies.
These rules may be referred to as the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022.
i.MCA has also issued a new format for the annual report on CSR activities, which will be included in the board’s report for the fiscal year beginning on or after April 1, 2020.
ii.It has also modified the way companies calculate the expenditure of conducting an impact assessment.
- It requires the large CSR spenders to conduct an independent impact assessment of their activities.
iii.This enables companies and investors to better target their social investments, understand their impacts, and develop better CSR initiatives.
- Companies having a CSR budget of Rs. 10 crore or more and all projects with an outlay of Rs. 1 crore or more are mandated to do such impact assessments.
Significant Provisions of the New CSR Rules
i.According to the CSR rules, companies are required to establish a ‘CSR Committee’ to oversee the implementation of their CSR obligations if they have any funds in their “Unspent Corporate Social Responsibility Account.”
- Companies are entitled to keep unspent CSR funds in this designated account, but must utilize them within three fiscal years.
- The CSR committee will be in charge of its implementation.
ii.According to the new rules, expenditure for social impact assessment that can be included in CSR spending cannot exceed 2% of total CSR expenditure for the relevant fiscal year or Rs. 50 lakh, whichever is greater.
- Prior to the amendment, the rules only permitted up to 5% of total CSR spending or Rs. 50 lakh, whichever is less.
iii.Under the new format of the annual report on CSR activities, the composition of the CSR committee requires companies to provide an executive summary as well as web links to impact assessments of completed CSR projects.
- Furthermore, it mandates the companies involved to provide information on the CSR amount spent on current projects as well as those other than ongoing projects.
iv.In addition, the company website must provide information about the composition of the CSR committee, the CSR policy, and CSR projects that have been authorized by the board.
v.Companies must spend on CSR activities if they have a net worth of at least Rs. 500 crore or a minimum turnover of Rs. 1,000 crore, or a net profit of Rs. 5 crore or more during the immediately preceding financial year.
Recent Related News:
i.In August 2022, The Ministry of Corporate Affairs(MCA) announced the winners and honourable mentions of the National Corporate Social Responsibility (CSR) Awards 2020 in three main categories: Corporate Awards for Excellence in CSR; CSR Awards for CSR in Aspirational Districts / Difficult Terrains; CSR Awards for contribution in National Priority Areas.
About Ministry of Corporate Affairs(MCA):
Union Minister- Nirmala Sitharaman (RajyaSabha- Karnataka)
Minister of State (MoS) – Rao Inderjit Singh