Lok Sabha Question No. 174 (UNSTARRED), answered on 2024-11-25
Subject: CSR Funds allocated for Rural Development
Ministry: CORPORATE AFFAIRS
Asked by: Shri Saptagiri Sankar Ulaka

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 174

ANSWERED ON MONDAY, NOVEMBER 25, 2024/AGRAHAYANA 4, 1946 (SAKA)

## CSR FUNDS ALLOCATED FOR RURAL DEVELOPMENT

## QUESTION

- 174 SHRI SAPTAGIRI SANKAR ULAKA:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a)  whether  the  Government  has  any  data  on  CSR  funds  allocated  to  rural development by corporate entities during the last year and if so, the details thereof;
- (b) the status of cases filed under the Companies Act during the last two years, and the effectiveness of the resolution mechanism;
- (c) the incentives which  are  being offered to  companies  for  adopting environmentally sustainable business practices;
- (d)  whether  the  Government  has  taken  any  steps  to  simplify  regulatory compliance  for  small  and  medium-sized  enterprises  (SMEs)  companies  and startups; and
- (e) if so, the details thereof?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF CORPORATE AFFAIRS   AND MINISTER OF STATE IN THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS [SHRI HARSH MALHOTRA]

(a):  There is no provision of allocation of Corporate Social Responsibility (CSR) funds  under  the  Companies  Act,  2013.  The  legal  framework  for  CSR  has  been provided under Section 135 of the Companies Act, 2013 ('Act'), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. Section 135 of the Act mandates every company having net worth of Rs. 500 crore or more, or turnover of Rs. 1000 crore or more, or net profit of Rs. 5 crore or more during the immediately preceding financial  year,  to spend  at least  two per cent of the  average  net  profits of the

Contd…2/

company made over immediately preceding three financial years towards CSR as per the CSR Policy of the Company. Every eligible company has to constitute a CSR Committee comprising three or more directors. The Committee shall formulate and recommend the CSR policy which indicates the activities to be undertaken by the company in area or subject specified in Schedule VII. CSR framework provides that CSR activities may be undertaken by the company itself or through the entities as mentioned in Rule 4(1) of Companies (CSR Policy) Rules, 2014. The Board of the company plans, decides, executes and monitors the CSR activities of the company based on the recommendation of its CSR Committee.  Further, Item No.(x) of the Schedule VII of the Act inter alia mentions  'Rural Development Projects'.

On the basis of filings made in the MCA21 registry by the companies, the CSR spent in Rural Development Project for the last three financial years 2020-21, 2021-22 and 2022-23 is at Annexure-I.

## (b): Status of cases filed under the Companies Act during the last two years is as under:

|   S. No. | Period        | Cases filed in courts   | Disposed off   | Withdrawn   |
|----------|---------------|-------------------------|----------------|-------------|
|        1 | 2022-23       | 1,946                   | 1,000          | 108         |
|        2 | 2023-24       | 1,452                   | 1,160          | 6,267       |
|        3 | 01.04.2024 to | 953                     | 1,056          | 41          |

Further, the only resolution mechanism available under the Companies Act, 2013 is  under  Section  441  of  the  Companies  Act,  2013,  by  way  of  compounding  of offences.

The  number  of  cases  which  have  been  compounded  and  fee  imposed  are  at Annexure II.

Contd…3/

(c), (d) & (e): The Government has taken many steps for adopting environmentally sustainable business practice and to simplify regulatory compliance for small and medium-sized enterprises (SMEs) companies and startups. Some of the important measures are as under:

- i. Amendments made in CA-13 in 2019 to de-criminalize technical & procedural violations under Companies Act.
- ii. Amendments made in CA-13 in 2020 to facilitate ease of doing business, further decriminalization of offences and improve compliance requirements, specifically  for  Small  Companies,  One  Person  Companies,  Start-ups  & Producer Companies.
- iii. Various  Rules  prescribed  under  the  CA-13  have  been  notified  as  well  as amended  from  time  to  time  to  address  the  difficulties  experienced  and suggestions made by the industry chambers and other stakeholders.
- iv. Extended the fast track process for mergers under the Companies Act, 2013 to  also  include  mergers  of  Startups  with  other  Startups  and  with  Small companies, so that the process of mergers & amalgamations is completed faster for such companies.
- v. New section  446B  for  lesser  penalties  for  One  Person  Companies,  small companies, startups and Producer Companies.
- vi. Provisions relating to Producer Companies (Earlier Part IXA of Companies Act, 1956) included in the Companies Act, 2013.
- vii. The Ministry has amended the Companies (Adjudication of Penalties) Rules, 2014  on  05.08.2024 (effective from 16.09.2024) to provide that the adjudication proceedings under Section 454 of the Companies Act, 2013 by the  Adjudicating  Officers  and  Regional  Directors  shall  take  place  in electronic mode only through the e- adjudication platform developed by the Ministry for this purpose. This would enable adjudication of such proceedings to be in a faster and user-friendly manner.
- viii. Amendment has been made in rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 on 9 th  Sep. 2024 (effective from  17 th   Sep.  2024).  Pursuant  to  this  amendment,  merger  of  a  holding company incorporated abroad with its wholly owned subsidiary incorporated in  India  would  require  approval  of  Central  Government  (delegated  to Regional  Directors).  Prior  to  this  amendment,  such  mergers  required approval of the NCLT.  This would make this process speedier and would allow NCLT to concentrate on other areas.

-4-

- ix. As per Section 2(40) of the Companies Act 2013, One Person Company and Small Company do not need to prepare and file cash flow statements as part of their financial statement.
- x. As per the proviso to Section 92(1) One Person Company and Small Company are not mandatorily required to get the Annul Return signed by Company Secretary.  One  Person  Company  and  Small  Company  also  have  lesser compliance requirement in comparison to others when it comes to meeting of board under Section 173 of this act.

******

Annexure-I ANNEXURE REFERRED TO IN REPLY OF LOK SABHA UNSTARRED QUESTION NO.

## 174 FOR 25.11.2024

| CSR Expenditure for Rural Development Projects from 2020-21 to 2022-23   | CSR Expenditure for Rural Development Projects from 2020-21 to 2022-23   | CSR Expenditure for Rural Development Projects from 2020-21 to 2022-23   | CSR Expenditure for Rural Development Projects from 2020-21 to 2022-23   |
|--------------------------------------------------------------------------|--------------------------------------------------------------------------|--------------------------------------------------------------------------|--------------------------------------------------------------------------|
| Sector                                                                   | FY 2020-21                                                               | FY 2021-22                                                               | FY 2022-23                                                               |
| Rural Development Projects (INR Cr.)                                     | 1,850.71                                                                 | 1,833.76                                                                 | 2,005.37                                                                 |

(Data upto 31.03.2024) [Source: Corporate Data Management Cell]

Annexure-II ANNEXURE REFERRED TO IN REPLY OF LOK SABHA UNSTARRED QUESTION NO.

## 174 FOR 25.11.2024

| S. No.   | Cases filed for compounding/period   | Status                  | Status   | Compounding fee imposed   |
|----------|--------------------------------------|-------------------------|----------|---------------------------|
|          |                                      | No. of cases compounded | Pending  | Pending                   |
| 1.       | 2022-23                              | 999                     | 744      | 21,87,09,410              |
| 2.       | 2023-24                              | 954                     | 764      | 22,20,44,825              |
| 3.       | 01.04.2024 to 31.10.2024             | 507                     | 513      | 13,59,65,810              |