Corporate Social Responsibility: Registration of Entities
CSR simply means corporate social responsibility. It provides a framework within which a corporation or firm is required to conduct its business that must be friendly socially and be beneficial for the overall development of the community. Under CSR, the organizations voluntarily take up such activities that ensure the wellbeing of the society at large. To give effect to such activities, the corporations can work in partnerships and develop relations with various stakeholders like customers, employees and local community.
CSR as given under “The Companies (Corporate Social Responsibility Policy) Rules, 2014”, means to include those activities that are specified under the garb of Schedule VII of The companies Act, 2013 which are deployed through the board of directors of the company by virtue of recommendations in accordance with the policy related to CSR of the company.
To exemplify, the following activities can be incorporated in a company’s CSR Policy:
• To indulge in activities that aids in rural development.
• To promote education, skill and livelihood enhancement, especially to empower children, elderly and differently abled.
• Measures to be undertaken for benefit and upliftment of war widows and dependents of armed forces veterans.
• To be able to maintain ecological balance, ensure sustainability of environment and protect flora and fauna.
• To help in setting up homes for destitute and underprivileged.
Why Corporate Social Responsibility is important?
1. CSR enables a corporation to attract potential customers since it adds value to its status and reflects a positive attitude of the company.
2. It effectuates harmony and establishes closer ties with the community. As a result, it does away with the perception that the corporation is just a place for employment.
3. Through commitment to CSR, various companies have contributed significantly towards protection of environment.
4. CSR ensures sustainable development, keeping in mind that the environment is not hampered in any way.
5. It facilitates alleviation of poverty.
6. It facilitates propagation of education especially for children.
7. It creates a win-win situation for government, civil society and business.
Implementation of CSR
The CSR must be implemented in a way that must be instrumental in ensuring a balance between business and social responsibility. The CSR strategy in this regard must be inclusive of identifying activities and projects to be carried out within a timeframe tagged along with monitoring process. Impact assessment and evaluation in a specific area can be incorporated by the organizations. Also the corporations can engage in building a network with other corporations and NGO’s who are already working in this field which shall render improvement in their strategies and status.
Companies can help in disseminating information and knowledge based on CSR policy through various media platforms like annual reports etc. The budget of the company should allocate certain amount that must only be used for CSR activities.
Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021:
• Registration of NGO’s
The companies (CSR) policy has been amended and accordingly, the companies, charitable institutions and NGO’s are required to follow the new procedures while they discharge their obligation related to CSR.
The registration is made compulsory for NGO’s while they carry the activities related to CSR on behalf of companies. Registration can be made by filing the Form CSR-1 which is available on the official website of The Ministry of Corporate Affairs.
Also, for an Ngo to be able to receive funds related to CSR, from a company, it must be:
1. A registered society
2. A registered public trust
3. A section 8 company
Which must entail at least three years of experience in conducting charitable activities and must be registered under the provisions of Income Tax (section 12A and 80G).
• NGO’s registration: Procedure
Rule 4(2) of the new amendment rules lays down the procedure of registration of NGO.
1. Firstly, registration of the entity must be made with the Registrar by filing the Form CSR-1 which must be signed and verified. It is available on the official website of The Ministry Of Corporate Affairs.
2. CSR registration number would be generated as and when you submit the CSR-1 Form.
• NGO’s Registration: Required details and documents
The basic details to be submitted along with Form CSR-1 include name, registration number, address, PAN and email-ID.
Form CSR-1: Guidelines
Form CSR-1 consist of three pages, the first two pages are about filing up details and attaching documents, the last page is about the certificate by practicing professional.
Following guidelines must be followed to fill out the form:
1. To fill out this form firstly you need to choose the nature of the entity, for e.g. if it is a Section 8 company or a trust or a society, select the option accordingly
2. Then you need to specify the CIN or registration number, name of the entity, its date of incorporation, address, E mail Id and PAN.
3. Thereafter attach the copy of PAN and certificate of registration.
4. Then you need to digitally sign the declaration.
5. Then on the third page, the certificate by the practicing professional must be signed by the whole time practicing company secretary, chartered accountant or a cost accountant.
6. Then submit your form. A unique number would be generated.
Pursuant to Section 135 of the Companies Act, 2013 and Rule 4(1) and (2) of Companies (CSR Policy) Rules, 2014 states the any charitable institution either Society, Trust or Section 8 Company duly registered under an Act of Parliament or State Legislature with recognition of Income Tax Department or else, need to get listed or registered in Ministry of Corporate Affairs duly filing form called CSR-1 with effect from 1st April, 2021. Further the form is applicable to existing entity as well as new entity formed thereafter the applicable date. The required form to be filed by such entity is already published and put on website for the use of stakeholders. It is 3 page form simply asking for entity form, registration details and address with valid certificate of registration and PAN Card copy of entity in addition to details of Trustee/Chairman/Director details on issued Form. Upon filing of Form, entity will received Unique Code and it establish the legal identity as well as give opportunity to such entity to serve in mega CSR Project of various entity in India to which Section 135 is applicable.
This is precisely record taking of all NGO in India doing charitable activities either under Corporate Social Responsibility or else to track the CSR expenditure and make transparent procedure for organization which want to do CSR activity from registered entity in Ministry of Corporate Affairs.
Therefore it is mandated by Government of India to get such entity registered with Ministry of Corporate Affairs.
Further it is again redeliberated to such NGO organization to get registered with Darpan Portal for better appearance and transparency.”
Over and above with the amendment introduced by the Finance Act, 2021 with effect from 1st April, 2021 the long-awaited renewal proposal for 12A/80G already registered entity with Income Tax Department has to renew its registration again by 30th June, 2021 is been finally implemented. The amended provision of Governing Act, Income Tax Act, 1961 is now fully enforceable regarding this provision and upon failure to fulfill the renewal requirements the existing registration of 12A/80G stands withdrawn. Department is working on form and its execution mode.