My company in Durgapur has failed to spend the mandatory CSR amount; what are the consequences and how can I rectify it?
RA Asked by Ramesh Bhat from India
Quick Answer
Under Section 135 of the Companies Act, 2013, every company meeting the turnover, net worth, or profit thresholds must spend at least two percent of its average net profits on CSR activities.
Detailed Legal Analysis
Under Section 135 of the Companies Act, 2013, every company meeting the turnover, net worth, or profit thresholds must spend at least two percent of its average net profits on CSR activities. If the company fails to spend the required amount, the board must specify the reasons in its report under Section 134(3)(o), and unspent amounts must be transferred to a specified fund within thirty days of the financial year end.
The CSR Committee must formulate the CSR policy and monitor implementation. The Calcutta High Court may take cognisance of continuing non-compliance if it affects public interest.
The West Bengal Premises Tenancy Act 1997 on designated funds and local area requirements may also apply. Penalties under Section 134(8) include fines on the company and officers in default.
Rectification requires transferring unspent amounts and ensuring compliance in subsequent years.
Disclaimer: AI-generated for educational purposes only. Does not constitute legal advice. Consult a qualified practitioner.