CSR Activities under new MCA-Era

Introduction

Ministry of Corporate Affairs has launched E-form CSR-1 on their website w.e.f. 1st April 2021. E-form CSR-1 is required to be filed pursuant to Section 135 of the Companies Act, 2013 and Rule 4 (1) and (2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Applicability

The provisions of CSR applies to:

• every company
• its holding company
• its subsidiary company
• foreign company

Having in the preceding financial year:

• Net Worth > 500 Crore ;or
• Turnover > 1000 Crore; or
• Net Profit > 5 Crore.

Importance of CSR

Corporate Social Responsibility (CSR) is an immense term which is used to explain the efforts of a company in order to improve society in any other way.

• CSR improves the public image by publicizing the efforts towards a better society and increase their chance of becoming favourable in the eyes of consumers.
• CSR increases media coverage as media visibility throws a positive light on the organization.
• CSR enhances the company's brand value by building a socially strong relationship with customers
• CSR helps companies to stand out from the competition when companies are involved in any kind of community.

Role of Board

According to Rule 4 of the Companies (Corporate Social Responsibility) Rules, 2014,

(1) The Board shall ensure that the CSR activities are undertaken by the company itself or through -

(a) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961 (43 of 1961), established by the company, either singly or along with any other company, or

(b) A company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or

(c) Any entity established under an Act of Parliament or a State legislature; or

(d) a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.

Compulsory registration

According to Sub Rule 2,

(a) Every entity, covered under sub-rule (1), who intends to undertake any CSR activity, shall register itself with the Central Government by filing the form CSR-1 electronically with the Registrar, with effect from the 01st day of April 2021:

Provided that the provisions of this sub-rule shall not affect the CSR projects or programmes approved prior to the 01st day of April 2021.

(b) Form CSR-1 shall be signed and submitted electronically by the entity and shall be verified digitally by a Chartered Accountant in practice or a Company Secretary in practice or a Cost Accountant in practice.

(c) On the submission of the Form CSR-1 on the portal, a unique CSR Registration Number shall be generated by the system automatically

Steps to fill CSR-1

1. Select the Nature of entity

• Company established under Section 8 of the Companies Act, 2013 with Section 12A and Section 80G registrations under the Income Tax Act, 1961
• Registered Public Trust with Section 12A and Section 80G registrations under the Income Tax Act, 1961
• Registered Society with Section 12A and Section 80G registrations under the Income Tax Act, 1961
• Company established under Section 8 of the Companies Act, 2013 or Registered Trust or Registered Society established by the Central Government or State Government
• Entity established under an Act of Parliament or State Legislature

2. Whether the Entity is established by any company or group of companies

3. Information of such Entity selected in Pt. 1

• CIN / Registration No. (In case of Section 8 need to mention CIN and in case Trust/ Society mention their registration no.)
• Name of Entity
• Date of Incorporation of the Entity
• Address of Entity
• Email ID of the Entity (OTP will be sent on the email mentioned)
• PAN of the Entity

4. Details of Directors/ Board of Trustees/ Chairman/ CEO/ Secretary/ Authorized Representatives of the entity

• Name
• Designation (Select from Drop down List)
• DIN/PAN
• Email Id

(Information can be filled for maximum 10 persons.)

5. Attachments

• Copy of Certificate of Registration/ Incorporation
• Copy of PAN of entity

6. Declaration & Certification

i. Signature of:

• the director;
• the Trustee or
• CEO or Chairperson or Chief functionary or
• authorized representative

Of the Entity:

ii. Certificate by Practicing (in whole time practice):

• Chartered Accountant
• Company Secretary
• Cost Accountant

Email & Immunity Certificate

When an E-Form is successfully processed, an acknowledgement of the same is sent to the user in the form of an email to the email id of the entity. Further, a digitally signed approval letter along with CSR Registration number with Format CSRXXXXXXXX where X represents system generated unique sequential number will be sent to the FO User as well as the email ID of the entity as entered in the E-form.

Important Point

• E-form CSR-1 can be filed with ROC from 01^st April, 2021.
• Email id of the entity is required to be entered and the same will be verified by One Time Password (OTP).

This button will be enabled only after successful Pre-scrutiny of the form. Click on this button to send OTP to the entity's email ID. Further, please note that OTP can be successfully sent to the email ID against one form, for a maximum of 10 times in one day. OTP shall be valid for a span of 30minutes.

• If any implementing agency fails to file CSR-1, they shall not be eligible to continue as the Implementing agency.
• The E-Form will be processed in STP mode.

Source

1. MCA Website & CSR-1 Form help kit
2. Section 135 of the Companies Act, 2013 and Rule 4 (1) and (2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014

NOTE: This Article is for the purpose of information and shall not be treated as solicitation in any manner and for any other purpose whatsoever. It shall not be used as legal opinion and not to be used for rendering any professional advice. Views represented & facts given here-in-above represent Author's own views & Understanding on the subject matter & based on the data obtained from the public domain. Each individual shall exercise due care while understanding & implementing the above CSR provisions in their respective organisations. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of others readers.

The author can also be reached at harshmjain08@gmail.com