Lok Sabha Question No. 1058 (UNSTARRED), answered on 2025-02-10
Subject: Amendment in Companies Act, 2013
Ministry: CORPORATE AFFAIRS
Asked by: Shri Anil Firojiya

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 1058 ANSWERED ON MONDAY, FEBRURAY  10, 2025 MAGHA 21, 1946 (SAKA) AMENDMENT IN COMPANIES ACT, 2013

QUESTION

1058. Shri Anil Firojiya:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

- (a)  whether  the  Government  proposes  to  make  any  amendment  to  the Companies Act, 2013 and if so, the details thereof along with the objectives of the said amendments and its likely impact on the companies,
- (b) the steps taken by the Government to monitor the expenditure incurred and projects undertaken by the companies under the Corporate Social Responsibility (CSR); and
- (c)  whether  the  Government  has  formulated  any  new  policy  to  check  the misuse of CSR funds and if so, the details thereof?

## ANSWER

THE 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):- In line with the Government's objective of promoting Ease of Living in the country  by  providing  Ease  of  Doing  Business  to  law  abiding  corporates, fostering improved corporate compliance for stakeholders and also to address emerging issues having impact on the working of corporates in the country, the Company Law Committee (CLC) has been constituted for examining and making recommendations to the Government on various provisions and issues pertaining  to  implementation  of  the  Companies  Act,  2013  and  the  Limited Liability Partnership (LLP) Act, 2008.

The  CLC  in its 2022  Report has  made  various  recommendations  for amendments in the Companies Act, 2013, broadly relating to promoting further ease  of  doing  business  for  law-abiding  corporates,  strengthening  existing regulatory practices to streamline and improve the operational efficiency of the Act, recognising new concepts in light of the rapidly evolving corporate landscape and changing business practices etc.

The report was placed on the website of the Ministry for public comments. Consultations  with  the  concerned  Ministries  and  Departments  are  being undertaken on the proposals. (b) and (c):- The legal framework for Corporate Social Responsibility (CSR) has been provided under Section 135 of the Companies Act, 2013 ('Act'), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. Schedule VII of the Act indicates the eligible list of activities that can be undertaken by the companies under CSR. The Board of the company is required to disclose the CSR Policy implemented by the company in its Board report and the Board of the company has to satisfy itself that the funds so disbursed have been utilised for the purposes and in the  manner  as  approved  by  it.  The  CSR  Committee  shall  formulate  and recommend to the Board, an annual action plan in pursuance of CSR policy, which includes the modalities of utilization for funds, monitoring and reporting mechanism  for  the  projects  or  programs  and  details  of  need  and  impact assessment, if any, for the projects undertaken by the company. The details of CSR activities, Impact Assessment etc. are required to be reported by the companies in the 'Annual Report on CSR' including annual action plan on CSR which is part of the Company's Board Report. CSR mandated companies who have their websites are required to make disclosures such as composition of CSR Committee,  CSR  Policy  and  CSR  projects  approved  by  Board  on  their website.  The  CSR  framework  is  disclosure  based  and  expenditure  on  CSR activities is required to be audited by the statutory auditors of the company. The  Ministry  has  notified  the  Companies  (Auditor's  Report)  Order,  2020, ('CARO, 2020') applicable from FY 2021 -22 which requires auditors to state details  of  any  unspent  CSR  amount.  Thus,  the  corporate  governance framework  along  with  the  existing  legal  provisions  such  as  mandatory disclosures, accountability of the CSR Committee and the Board, provisions for  statutory  audit  of  accounts  of  the  company  etc.  provide  adequate monitoring mechanisms. CSR mandated companies are required to file CSR-2 Form every year which serves as a single source of information about CSR related activities of each company. Further, if any violation of CSR provisions is reported, action against such noncompliant Companies is initiated as per provisions of the Act following due process of law.

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