Corporate Social Responsibility
A company under its Corporate Social Responsibility is donating the specified amount to a limited company which is an associate company of the same having its objective to promote protection of environment. Will this be considered as an activity under CSR?
Schedule VII of the Companies Act, 2013 gives us a list of activities that can be considered as an act of CSR under Section 135 of the Companies act, 2013. One of the entries in Schedule VII includes promoting the protection of environment. Therefore work undertaken for the protection of the environment will be considered as valid CSR activity under the Companies Act, 2013.
Under Rule 4 sub-rule 2 of The Companies (Corporate Social Responsibility Policy) Rules, 2014 a Company is allowed to conduct its CSR activities through an Associate Company created under Section 8 of the Companies Act, 2013. The Rules specify that while working through an Associate Company, the details about the projects undertaken and the utilization of funds must be declared by the Company. Further, the CSR activity under taken cannot be only for the benefit of the company's employee.
A recent notification has provided that while working with an Associate Company for CSR activities the Company must ensure that the Associate Company has a track record of three years of working in the field for which the CSR funds and program has been assigned to it. Therefore, as per your facts, in the present case make sure that the Associate Company to which you are donating the money has an experience of three years in the area of environment protection.
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