According to a Ministry of Corporate Affairs notification dated January 22, 2021, all non-governmental organisations (NGOs) seeking CSR funding must register in Form CSR-1 with MCA commencing from April 1, 2021.
As we all know, India has thousands of non-governmental organisations (NGOs) working for the betterment of society. Throughout the COVID Pandemic, non-governmental organisations (NGOs) played a critical role in caring for the needy and supporting them with food and shelter during the lockdown phase. The Government of India created the NGO Darpan site a few years ago to maintain a centralised directory of NGO’s functioning in India. In today’s world, any NGO wishing to apply for a government grant must first get Niti Aayog Registration by registering with the NGO Darpan Portal.
A practising CA, CS, or Cost Accountant must sign and verify Form CSR-1 before it is filed electronically. The MCA site will create a unique CSR registration number for you when you submit your application. The goal of this registration is to guarantee that CSR activities carried out by NGOs in the nation are effectively monitored. In this post, we will address the CSR Registration procedure and requisite documentation, as well as the relevant sections as per the Companies Act, 2013.
Definition of Corporate Social Responsibility
“Corporate Social Responsibility (CSR)” denotes the activities carried out by a company in order to fulfil its statutory responsibility under section 135 of the Act and in line with these regulations, but does not include the following:-
- Activities carried out as part of the company’s regular operations: Provided, however, that any company engaged in the research and development of new vaccines, drugs, or medical devices in the ordinary course of business may engage in research and development of new vaccines, drugs, or medical devices pertaining to COVID-19 for the fiscal years 2020-21, 2021-22, and 2022-23, subject to the following conditions:-
- These research and development activities must be undertaken in conjunction with any of the institutes or organisations listed in Schedule VII item (ix) of the Act;
- Details of these activities will be separately included in the Annual Report on CSR, which will be included in the Report of the Board;
- Any activity carried out by the firm outside of India, excluding the training of Indian sports personnel who represent any state or union territory at a national level or India at a global arena;
- Under section 182 of the Act, make any direct or indirect contribution to any political party;
- Operations that benefit business employees as specified in clause (k) of section 2 of the Wages Code of 2019 (29 of 2019);
- Companies supported activities and Sponsored events that corporations fund in order to get marketing benefits for their products or services;
- Actions carried out in order to meet any other statutory duties imposed by Indian law;
According to this notification, effective April 1, 2021, every company covered by sub-rule (1) that wishes to engage in any CSR activity must register with the Central Government by electronically completing Form CSR-1 with the Registrar. The system will produce a unique CSR Registration Number after a successful submission of Form CSR-1.
What is Form CSR-1?
The Form CSR-1 is designed to keep the record of CSR spending in the country. It must be filed electronically by implementing organisations planning to conduct CSR activities for all CSR projects commencing April 1, 2021.
For each company, a unique CSR Registration Number will be produced after the form is submitted. The MCA maintains a list of all such cooperating entities in this manner, increasing the likelihood of timely completion of requested activities. Companies can use this previous track record of implementing agencies to assist them in determining whether or not to engage them in future CSR initiatives.
According to a notification published by the Ministry of Corporate Affairs, CSR funding will be available exclusively to NGOs that have registered with MCA by completing Form CSR-1 commencing April 1, 2021.
The following types of non-governmental organisations (NGOs) are eligible to complete Form CSR-1 on the MCA Portal in order to receive CSR funding.
- A company created under section 8 of the Act, or a registered public trust or a registered society constituted by the company, either alone or in conjunction with another business, under sections 12A and 80 G of the Income Tax Act, 1961 (43 of 1961), or;
- A corporation formed under section 8 of the Act, a registered trust, or a registered society formed by the federal or state governments; or
- Any entity constituted by a law passed by Parliament or a state legislature; or
- A business entity formed under Section 8 of the Act, or a registered public trust or a registered society formed under Sections 12A and 80G of the Income Tax Act, 1961, and with at least 3 years of experience in comparable operations.
Is Filing of Form CSR-1 Mandatory?
- With effect from April 1, 2021, every entity (NGO) as defined above that wishes to engage in any CSR activities must register with the Central Government by electronically completing Form CSR-1 with the Registrar.
- As a result, filing of Form CSR-1 is mandatory. The aforesaid regulation, however, will not apply to CSR projects approved before April 1, 2021.
- Form CSR-1 must be signed and filed electronically by the entity, and it must be digitally validated by a CA, CS, or Cost Accountant, in practise.
- When you submit Form CSR-1 on the MCA site, the system will create a unique CSR registration number for you.
Documents required for filing Form CSR-1
However, the following additional information/documents should be maintained on hand before submitting Form CSR-1: –
- Trust deed/ Society Registration Certificate/ Section 8 Company Registration Certificate,
- A copy of the exemption letter issued under section 12A of the Income Tax Act,
- A copy of the letter approving registration under Section 80G of the Income Tax Act,
- Audited Financial Statements of the 3 most recent fiscal years,
- A project report detailing the NGO’s activities and operations in previous years,
- DIN/PAN of the Director of a section 8 company/ Board of Trustees of a trust/ Chairman or Secretary of a society’s DIN/PAN,
- Email addresses of the above-mentioned officials
- A copy of the entity’s resolution allowing the individual to sign on behalf of the entity.
- A letter of engagement or authorization in the name of a CA, CS, or Cost Accountant, who will validate the form.
- CA/CS/Cost Accountant’s digital signature, which will be used to validate the Form CSR-1.
Who is required to sign Form CSR-1?
The following individuals must digitally sign Form CSR-1: –
- Any director who is not disqualified under the Companies Act, 2013 – in the event of a Section 8 company.
- One of the Trustee/CEO – in the case of a Registered Public Trust.
- Chairman/CEO/Secretary – in the case of a Registered Society.
- Authorised representative on behalf of an entity – in the event of an entity formed under an Act of Parliament or a State Legislature:
It must also be guaranteed that the Form is digitally validated by a full-time practising Chartered Accountant, Company Secretary, or Cost Accountant.
How download Form CSR-1 from the MCA website?
This form may be downloaded from the MCA website in the following way:-
Email Address and Immunity Certificate
When the e-form CSR-1 is successfully completed, the user receives an acknowledgement in the form of an email to the entity’s email address. A digitally signed permission letter will also be delivered to the FO User, along with a CSR Registration number with Format CSRXXXXXXXX where X represents a system generated unique sequential number and the entity’s email address as submitted in the e-form.
In a nutshell, Corporate Social Responsibility refers to a self-regulatory business model built on an internationally recognised concept known as COREX. Furthermore, Section 135 of the Companies Act 2013 serves as the governing body for all CSR-related problems.
In addition, the MCA, or Ministry of Corporate Affairs, has modified parts of the Corporations (Corporate Social Responsibility Policy) Rules 2014, in order to establish more transparency and improve the degree of accountability of businesses toward the development of the environment and community. The abovementioned amendment rules are called as the Companies (Corporate Social Responsibility Policy) Amendment Rules 2021.
Finally, if you have any doubt or need assistance, contact Enterslice; our proficient and trained specialists are always here to provide you with the finest advice and help.
Read our article:Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021
Akansha is a Delhi-based lawyer who is actively involved in publishing articles on a plethora of aspects of Indian and International laws. She holds Master in law (LL.M) focused on Business Laws from Amity University, Noida. Having expertise in the same, she has authored several publications on legal topics related to corporate, M&A and commercial laws.