MCA has notified section 21 of the Companies (Amendment) Act, 2019 with effect from 22 January 2021. Section 21 amends section 135 of the Companies Act 2013 (CSR) to provide for transfer of any unspent amount into a Fund specified under Schedule VII. In case of ongoing projects, transfer of such amount to a special account, to be spent within three financial years and thereafter transferred to the Fund specified in Schedule VII. Contravention of these provisions are liable to a fine of fifty thousand rupees up to twenty-five lakh rupees and every officer of such company who is in default is punishable with imprisonment or fine or both. To refer to the gazette notification dated 22 January 2020, click here.
Companies (Corporate Social Responsibility) (Amendment) Rules, 2021
MCA has notified amendments to the Companies (Corporate Social Responsibility) Rules, 2014 to provide for the following significant changes:
“corporate social responsibility” shall not include :
“Net profit” shall not include:
Provided that in case of a foreign company covered under these rules, net profit means the net profit of such company as per profit and loss account prepared in terms of clause (a) of sub-section (1) of section 381, read with section 198 of the Act;
“Ongoing Project” means a multi-year project undertaken by a Company in fulfilment of its CSR obligation, having timelines not exceeding three years, excluding the financial year in which it was commenced, and shall include such project that was initially not approved as a multi-year project but whose duration has been extended beyond one year by the board based on reasonable justification;
The Board may alter such plan during the financial year, on the recommendations of its CSR Committee, based on reasonable justifications to that effect.
Any capital asset created by a company prior to the commencement of the Amendment Rules, shall, within a period of 180 days, comply with the requirement of this rule, which can be extended by a further period of not more than 90 days with Board approval, based on reasonable justification.
To refer to the gazette notification dated 22 January 2021 of the Companies (Corporate Social Responsibility) (Amendment) Rules, 2021, click here.
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