NEW DELHI (India CSR): The Ministry of Corporate Affairs (MCA) has imposed a hefty penalty of Rs. 92 lahks on Kony India Private Limited, an IT company, for violating the provisions of the Companies Act, 2013, related to Corporate Social Responsibility (CSR).
According to an order issued by the Registrar of Companies (ROC), Hyderabad, on February 22, 2023, Kony India had failed to transfer an unspent amount of Rs. 42,09,263/- to a special account called the Unspent Corporate Social Responsibility Account within 30 days from the end of the financial year 2019-20, as required by Section 135 (6) of the Act.
Section 135 (6) mandates that if a company fails to spend the prescribed amount on CSR activities in a financial year, it shall transfer the such unspent amount to a fund specified in Schedule VII of the Act within six months of the expiry of the financial year or to the Unspent Corporate Social Responsibility Account within 30 days from the end of the financial year.
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CSR Violations
The ROC observed that Kony India had prima facie committed fraud (CSR Violations) on its shareholders and stakeholders by not complying with the statutory obligation of transferring the unspent CSR amount within the specified time frame. Therefore, the ROC issued the following directions:
Kony India shall pay a penalty of Rs. 84,18,526/- or one crore rupees, whichever is less, for violating Section 135 (6) of the Act.
The officers in default of Kony India shall pay a penalty of Rs. 2,00,000/- each for violating Section 135 (6) of the Act.
The penalties shall be paid within 30 days from the date of this order.
Kony India, which makes CSR violations, may file an appeal against this order within 60 days from the date of this order.
Failure to comply with this order may result in further fines or imprisonment.
The ROC also cautioned other companies to adhere to the provisions of Section 135 (6) of the Act and to transfer the unspent CSR amount to the specified fund or account within the prescribed time limit. The ROC further advised the companies to be transparent and accountable in their CSR activities and reporting.
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