MCA strengthens collaborative CSR

The MCA vide a notification dated January 19, 2015 has made changes to the Companies (Corporate Social Responsibility Policy) Rules, 2014. The copy of the notification available on the MCA Website is an unpublished copy and the same will come into effect upon its publication in the official gazette.

Previously, the board of directors of a company would have to undertake CSR activities approved by its CSR committee, through a CSR Entity i.e. a registered trust or a registered society or a company established under section 8 of the Act by the company or its holding or subsidiary or associate company. Companies may now undertake CSR activities through a CSR Entity established by

• the company singly, or
• the company along with its holding, subsidiary or associate company, or
• along with any other company or holding or subsidiary or associate company of such other company, or otherwise.

While the earlier rule permitted companies to undertake CSR activities through a CSR Entity established by itself or along with its own subsidiaries or associate companies, the notification has paved the way for formation of CSR Entities by collaboration between separate companies.

This change is in line with the spirit of Sub-rule (3) of Rule 4 of the CSR Rules, whereby pooling of resources or collaborative expenditure was permitted. The requirement of separate accounting to form part of the board report will continue to apply to such pooled resources.