Government provides the broad framework of Corporate Social Responsibility (CSR) through Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014.
In a written reply to the Rajya Sabha, Minister of State for Corporate Affairs Rao Inderjit Singh said, "In the CSR legal framework, the word ‘Non-governmental Organisations (NGO)’ has nowhere been defined."
Section 135 of the Act read with Rule 4 of the Companies (CSR Policy) Rules, 2014 prescribes that the Board of the company is empowered to undertake CSR activities either by itself or through engaging an Implementing Agency as mentioned in the said rule, he said.
The minister was responding to a query raised by DMK leader P Wilson on local funds not available for NGOs as most of the CSR goes to central government oriented projects.
The MP also asked the government for steps to fund NGOs through CSR as there has been a 90 per cent drop in donations from abroad for NGOs from 2017-21.
To which, the Minister said, "In the CSR legal framework, the word ‘Non-governmental Organisations (NGO)’ has nowhere been defined."
Section 135 of the Act read with Rule 4 of the Companies (CSR Policy) Rules, 2014 prescribes that the Board of the company is empowered to undertake CSR activities either by itself or through engaging an Implementing Agency as mentioned in the said rule, the minister added.
On the basis of filings made by the companies in the MCA21 registry, the Minister said "companies have spent a cumulative amount of ₹70,764.70 Crores during the FY 2017-18 to 2020-21 of which approximately 60% of the CSR expenditure has been spent through engaging implementing agencies."
Under the Act, CSR is a Board driven process and the Board of the company is empowered to plan, decide, execute and monitor CSR activities of the company based on the recommendation of its CSR Committee,he said.
"The Government does not issue any specific direction to the companies to spend in any particular geographical area or activity," he added.
The Government provides the broad framework of Corporate Social Responsibility (CSR) through Section 135 of the Companies Act, 2013 (‘Act’), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014.
The CSR framework is disclosure based and companies are required to file details of CSR activities annually in the MCA21 registry, as part of their Profit & Loss Account and the same is required to be audited by the statutory auditors of the company.
Further, the Board of the company is also required to disclose the CSR Policy implemented by the company in its Board report. Thus, the corporate governance framework along with the existing legal provisions such as mandatory disclosures, accountability of the CSR Committee and the Board, provisions for statutory audit of accounts of the company etc. provide adequate safeguards in this regard.
Regarding CSR data for the financial year 2020-21, the Minister said it is informed that the companies are required to hold Annual General Meeting (AGM) within six months from the end of financial year.
Thereafter, financial statements and board reports containing disclosure about CSR, are to be filed in MCA21 within 30 days of the AGM. In view of the disruption caused by COVID-19 pandemic, Registrars of Companies had accorded extension of time till 30th November, 2021 for conduct of AGMs by companies.
The Ministry vide General Circular No. 22/2021 dated 29.12.2021 has relaxed the levy of additional fees till 15.02.2022 for filing of financial statement in respect of the financial year 2020-21, the minister added.
