Offsetting of excess Contribution of CSR funds to PM CARES made in FY 2019-20 against the requirement of CSR spending in FY 2020-21
Ministry of Corporate Affairs (MCA) has issued a clarification on offsetting the excess CSR spent for FY 2019-20
Offsetting of excess Contribution of CSR funds to PM CARES in FY 2019-20
In view the spread of COVID-19 in India, an appeal was made in 2020 to the MDs/CEOs of top 1000 companies in terms of market capitalization, to contribute generously to “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund” (PM CARES Fund).
In the said appeal, it was mentioned that the said contribution may include the unspent CSR amount, if any, and an amount over and above the minimum prescribed CSR amount for FY 2019-20, which can later be offset against the CSR obligation arising in subsequent financial years.
Many companies who have contributed CSR funds to the ‘PM CARES Fund’ over and above their prescribed CSR amount for FY 2019-20 had represented to the MCA for setting off the excess CSR amount spent by the companies in FY 2019-20 by way of contribution to ‘PM CARES Fund’ against the mandatory CSR obligation for FY 2020-21.
The MCA has examined the representation and issued a circular clarifying that where a company has contributed any amount to ‘PM CARES Fund’ on 31.03.2020, which is over and above the minimum amount as prescribed under section 135(5) of the Companies Act, 2013 (“Act”) for FY 2019-20, and such excess amount or part thereof is offset against the requirement to spend under section 135(5) for FY 2020-21 in terms of the aforementioned appeal, then the same shall not be viewed as a violation subject to the following conditions:
(i) that the amount offset as such shall have factored the unspent CSR amount for previous financial years, if any;
(ii) the Chief Financial Officer (CFO) shall certify that the contribution to “PM-CARES Fund” was indeed made on 31st March 2020 in pursuance of the appeal and the same shall also be so certified by the statutory auditor of the company; and
(iii) the details of such contribution shall be disclosed separately in the Annual Report on CSR as well as in the Board’s Report for FY 2020-21 in terms of section 134 (3) (o) of the Act.