A bill to amend companies Act, 2013 has been passed by the government on Wednesday.
A major change related to Corporate Social Responsibility (CSR) norms related to the transfer of unused funds to National CSR Fund is proposed to be approved.
The proposed changes to the Companies Act will require that the companies that are not able to spend their full amount to CSR activities an ongoing project that requires funding in stages, these funds are required to be deposited mandatory for corporate social responsibility expenditure for a in the “escrow account” for up to three years.
The deposited amount has to be spent within the next three years.
Further, if a company does not have an ongoing project that requires funding in stages, then it will be required to transfer unused CSR funds to the National CSR Fund at the end of the financial year.
In order to ensure the compliance related to CSR, it is further proposed to amend section 135 of the Companies Act, 2013, which will provide for the specific penal provisions for non-compliance of CSR and provide the directions to fulfill the responsibilities related to CSR.
“The proposed amendments will help law to remove loopholes in corporate governance and compliance framework”.