The corporate affairs ministry has sought public comments on proposed changes to rules governing Corporate Social Responsibility (CSR) policy under the companies law.
“In order to operationalise the Companies (Amendment) Act, 2019, the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2020 has been drafted for carrying out amendments in the Companies (CSR Policy) Rules, 2014,” the ministry said in a notice.
Under the companies law, certain classes of companies have to shell out at least two per cent of the average net profits, made during the three immediately preceding financial years, towards CSR activities.
The Companies (Amendment) Act, 2019 amended Section 135 dealing with CSR and was published in the official gazette on July 31, 2019.
Among other changes in the rules, the ministry has proposed setting up the ‘National Unspent Corporate Social Responsibility Fund’. The fund would be utilised for the purposes of undertaking CSR projects in the areas or subjects specified in Schedule VII of the Act.
“… until such fund is created the unspent CSR amount in terms of provisions of sub-section (5) and (6) of Section 135 of the Act shall be transferred by the company to any fund as specified in schedule VII of the Act,” as per the draft rules.
Under Section 135, every company having net worth of at least Rs 500 crore, turnover of Rs 1,000 crore or more, or a minimum net profit of Rs 5 crore during the immediately preceding financial year has to make CSR expenditure.
Comments on the proposed changes in the rules have been sought till March 28.