CORPORATE LAW UPDATE
22nd September 2022
Issue No. 12/22-23
THE MINISTRY OF CORPORATE AFFAIRS AMENDS THE COMPANIES (CORPORATE SOCIAL RESPONSIBILITY POLICY) RULES, 2014
By a gazette notification bearing no. G.S.R. 715(E) dated 20th September, 2022, the Ministry of Corporate Affairs has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022 (“Amendment Rules”) amending the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSR Rules”) framed under the Companies Act, 2013 (“the Act”).
The key amendments brought about by Amendment Rules are as follows:
- A company shall constitute a corporate social responsibility committee to comply with provisions mentioned under sub-sections (2) to (6) of Section 135 of the Act if the company has any amount in their ‘unspent CSR account’ as per section 135(6) of the Act.
- The exemption granted under Rule 3(2) of the CSR Rules to a company which ceases to be a company under section 135(1) of the Act (i.e., a company having a net profit of Rs. 5cr or more or net worth of Rs. 500cr or more or a turnover of Rs. 1000cr during the immediately preceding financial year) for three consecutive financial years has been deleted.
- A company can undertake and implement its CSR activities through a registered society that has been granted exemption under sub-clauses (iv), (v), (vi) or (via) of Clause 23C under Section 10 of the Income Tax Act, 1961.
- The maximum percentage of expenditure that a company can undertake for impact assessment as per Rule 8(3) of the CSR Rules has now been reduced to 2% of the total CSR expenditure from the earlier provision of 5%. Pursuant to the Amendment Rules, a company can now spend a maximum of 2% of total CSR expenditure or Rs. 50 lakhs, whichever is higher for an impact assessment of its CSR activities.
- The format for an annual report on CSR activities which to be included in the board report for the financial year commencing on or after 1st April 2020 has now been revised.
The Amendment Rules can be accessed here
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