As per section 135 of the Companies Act, read with Rule 4(1) and 4(2) of the Companies (Corporate Social Responsibility Policy) Rules, every company should mandatorily file Form CSR-1.
Section 135 of the Companies Act
Section 135 states that,
(1) Every company having,
– INR 500 crores or more of net worth, or
– INR100 crores or more turnover, or
– INR 5 Crores or more net profit earned
by the company in the three financial years immediately preceding the current relevant financial year, shall constitute a Corporate Social Responsibility Committee (CSR) of the Board, consisting of 3 or more directors, and out of this, there should be at least one independent director.
And if such a company is not required to appoint independent directors, it shall have at least two directors.
(2) The Board should also report the composition of the CSR Committee, and
(3) The CSR committee shall,
– Compose or draw up and make the recommendation to the Board, a CSR Policy which shall indicate the activities to be undertaken by the company regarding the same.
– recommend the amount of expenditure to be spent on the activities which will be undertaken by the company pertaining to areas or subjects that are laid down in Schedule VII of the Companies Act, and
– Monitor and analyse the Corporate Social Responsibility Policy of the company from time to time.
(4) The Board shall also,
– take into account the suggestions that the CSR Committee makes, appoint, approve the CSR Policy drafted for the company, and disclose the contents of such Policy in its report and also place it on the company’s website, in the prescribed manner (if any); and
– Ensure that the activities which are included in the CSR Policy formulated by the Committee are undertaken by the company without any failure.
(5) The Board of Directors formed by the company, shall also ensure that the company spends, in every financial year, at least or not less than 2%, of the average net profits of the company made during the three immediately preceding financial years or such immediately preceding financial years if 3 years have not passed since its incorporation.
Rule 4(1)
Referring to Rule 4(1) of the Companies (Corporate Social Responsibility Policy) Rules, we can say that,
The Board shall ensure that the CSR activities are undertaken by the company itself or through its subsidiaries.
(a) a company which is formed or 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 on a single basis or along with any other company, or
(b) a company which is stated under section 8 of the Companies Act or which is a registered trust or a registered society, that the Central Government or State Government has established; or
(c) any entity or a company established under an Act of Parliament or a State legislature; or
(d) a company which has been formed or established under section 8 of the Companies Act, or
a registered public trust or
A registered society, registered under Section 12A and 80G of the Income Tax Act, 1961, and is also known for having a proven track record of at least 3 years in undertaking similar activities.
Rule 4(2)
And as per Rule 4(2) of the said Rules, all the above-specified entities shall register themselves with the Central Government by filing the form CSR-1 electronically with the Registrar, with effect from the 01s01st April.
However, it should also be noted that this rule shall not be applicable to CSR projects or programs approved prior to April 1
The Form CSR-1 should be signed and submitted electronically by the entity. This should also be verified in digital mode by a Chartered Accountant in practice, a Company Secretary in practice, or a Cost Accountant in practice. Upon submission of the prescribed Form CSR-1 on the portal, the system will generate a unique CSR Registration Number.
Requirements for this Firm
The following can be understood as the requirements that the company must comply with in order to file this form.
– A valid & registered Digital Signature Certificate (DSC) of the Director, Trustee, CEO, Chairperson, Chief functionary, or Authorized Representative of the Entity
– A copy of the PAN of the Entity
– A copy of the Certificate of Registration of the Entity
– An active Email ID of the Entity for OTP. This option to send an OTP for verification will be enabled only after the form has been successfully pre-scrutinized.
– An authorization to the person signing the form digitally (i.e., an effective and passed Resolution no. and the date from which it is effective) is also required.
Thus, we can conclude that Form CSR-1 is used by companies that intend to undertake a CSR activity. They shall file the same with the Central Government, and it will only be in effect from April 12021. Any CSR projects or programmed prior to such date i.e., 1st Apr01st Aprilhall not comply with the filing of Form CSR-1.
