TRUST REGISTRATION WITH MCA

BY CA AMRESH VASHISHT
As per guidelines issued by MCA, From 1 st April 2021, CSR Funding will be released only
to that NGOs, Trusts, Religious Trusts, Societies, 12AA registered entities, 80 G granted
entities, Section 8 Company that are registered with MCA by filing Form CSR-1.So, if
such institutions willing to receive CSR Funding then it is mandatory for them to get
registered with MCA by Filing Form CSR-1 as soon as possible. And Form CSR-1 is now
live for Filing on MCA Portal. Neither there is any date prescribed nor is any fee
prescribed to file the form CSR-1.

As per the notification every entity, covered under sub-rule (1), who intends to
undertake any CSR activity, shall register itself with the Central Government by filing
the Form CSR-1 electronically with the Registrar. On successful submission of Form
CSR-1, a unique CSR Registration Number shall be generated by system automatically.

ELIGIBILITY TO FILE CSR-1.

(a) a company established under section 8 of the Act, or a registered public trust or a
registered society, registered under section 12A and 80 G of the Income Tax Act, 1961
(43 of 1961), established by the company, either singly or along with any other
company, or

(b) a company established under section 8 of the Act or a registered trust or a registered
society, established by the Central Government or State Government; or

(c) any entity established under an Act of Parliament or a State legislature; or

(d) a company established under section 8 of the Act, or a registered public trust or a
registered society, registered under section 12A and 80G of the Income Tax Act, 1961,
and having an established track record of at least three years in undertaking similar
activities

Conditions attached to eligible trust

Donation of money to a trust by a company is treated as CSR expenditure of the

company vide General Circular No. 21/2014 of MCA dated June 18, 2014, which
clarifies that Contribution to Corpus of a Trust/ Society/ Section 8 companies etc. will
qualify as CSR expenditure as long as :
 (a) the Trust/ Society/ Section 8 company etc. is created exclusively for undertaking
CSR activities or
(b) where the corpus is created exclusively for a purpose directly relatable to a
subject covered in Schedule VII of the Act
(c) There is a primary condition that, NGO must be registered under Section -12A
and 80G of Income Tax Act 1961.However All the existing NGOs which are
registered under Section 12A and Section 80G of Income Tax Act 1961 has to file
re-registration request under both section on or before 30.06.2021. Till
30.06.2021 all the existing registrations are valid and on the basis of which you
can file Form CSR-1 on MCA Portal for getting CSR Funding.
(d) After CSR-1 Registration certificate from Ministry of Corporate Affairs, as on
date, no such annual compliance has been prescribed by Ministry

Now, another condition was issued by MCA by way of a following notification dated
22nd January 2021, making it mandatory for all NGO’s which wants to raise CSR
Funding to enrol with MCA w.e.f 01/04/2021 to get CSR Funding.

MCA notifies 22nd day of January, 2021 as the date on which the provisions of section
21 of Companies (Amendment) Act, 2019 shall come into force. Section 21 deals with
Amendment of section 135 of Companies Act, 2013 related to Corporate Social
Responsibility. Also Read – Companies (Corporate Social Responsibility Policy)
Amendment Rules, 2021

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION New Delhi, the 22nd January, 2021
S.O. 324(E).—In exercise of the powers conferred by sub-section (3) of section 1 of the
Companies (Amendment) Act, 2019 (22 of 2019), the Central Government hereby
appoints the 22nd day of January, 2021 as the date on which the provisions of section
21 of the said Act shall come into force.
[F. No. 1 /5 /2019-CL.I]
K.V.R. MURTY, Joint Secy.

Corporate Social Responsibility

“Corporate Social Responsibility (CSR)” means the activities undertaken by a Company

in pursuance of its statutory obligation laid down in section 135 of the Act in accordance
with the provisions contained in these rules, but shall not include the following,
namely:-

(i) Activities undertaken in pursuance of normal course of business of the company:

Provided that any company engaged in research and development activity of new
vaccine, drugs and medical devices in their normal course of business may undertake
research and development activity of new vaccine, drugs and medical devices related to
COVID-19 for financial years 2020-21, 2021-22, 2022-23 subject to the conditions that-

(a) Such research and development activities shall be carried out in collaboration with
any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Act;

(b) Details of such activity shall be disclosed separately in the Annual report on CSR
included in the Board’s Report;

(ii) Any activity undertaken by the company outside India except for training of Indian
sports personnel representing any State or Union territory at national level or India at
international level;

(iii) Contribution of any amount directly or indirectly to any political party under
section 182 of the Act;

(iv) activities benefitting employees of the company as defined in clause (k) of section 2
of the Code on Wages, 2019 (29 of 2019);

(v) Activities supported by the companies on sponsorship basis for deriving marketing
benefits for its products or services;

(vi) Activities carried out for fulfilment of any other statutory obligations under any law
in force in India;

As per this notification from 01 April 2021 onwards, every entity, covered under sub-
rule (1), who intends to undertake any CSR activity, shall register itself with the Central
Government by filing the Form CSR-1 electronically with the Registrar. On successful
submission of Form CSR-1, a unique CSR Registration Number shall be generated by
system automatically.

Filing CSR-1

Eligible entities cannot file Form CSR-1 directly with MCA. Form CSR-1 is to be signed
digitally by the authorised person of NGO and a practising professional. The
Professional may be Chartered Accountant/ Company Secretary/ Cost Accountant who
is in whole time practising. The following documents are required for filing Form CSR-1

1. Copy of PAN Card of the NGO

2. Mail ID and Mobile Number
3. Details of Governing Body Members
4. Copy of Registration Certificate
5. Digital Signature of the Authorised Person with his PAN Number
CSR is also applicable on Section 8 Company too

Section 135 prescribes “….shall ensures that company spends….”.The company has to
spend the amount. Further, “ Every company…….”, i.e. no specific exemption given to
section 8 companies with regard to applicability of section 135, hence section 8
companies are required to follow CSR provisions.

Applicability of CSR provisions on Corporates

CSR is not applicable on all the companies. It is mandatory for the company having
conditions of worth of company or the specified turnover in the previous years. The
main points of CSR applicability and its execution are as follows.

1. Every Company having

 net worth of rupees five hundred crore or more, or

 turnover of rupees one thousand crore or more or
 a net profit of rupees five crore or more (net profit calculated in accordance with
Section 198)

during the immediately preceding financial year shall constitute a Corporate Social
Responsibility Committee.

2. Every Corporate Social Responsibility Committee of the Board consist of three or

more directors, out of which at least one director shall be an independent director.
Provided that a Company on which sub-section (4) of section 149 related to
appointment of Independent Director is not applicable, it shall have its Corporate Social
Responsibility Committee with two or more directors.

3. Provided that in case of a foreign Company, the Corporate Social Responsibility

Committee shall comprise of two persons of which one person shall be the person
resident in India authorised to accept notices and any document on behalf of the
Company and the other person shall be nominated by foreign company.It is the duty of
the Corporate Social Responsibility Committee to monitor Corporate Social
Responsibility Policy of the Company from time to time.

4. The Company which fall under the above criteria shall require to spend at least two
per cent of the average net profits of the immediately preceding three financial years.
Provided that the Company which is a newly incorporated and has not completed three
financial years from its incorporation, shall require spending at least two per cent of the
average net profits of the preceding financial year. The Company shall give preference
to the local area and areas around which the Company operates.
5. Every Corporate Social Responsibility Committee shall formulate and recommend the
Corporate Social Responsibility Policy to the Board for their approval. The Corporate
Social Responsibility policy must contain the activities as specified in Schedule VII
(Annexure – A) of the Companies Act, 2013 on which the amount is spend as Corporate
Social Responsibility.

6. The Board will approve the Corporate Social Responsibility Policy of the company
and disclose the Policy on the website, if any and disclose the contents of the Policy in
the Board Report of the Directors. If the Company fails to spend the amount on the
activities of Corporate Social Responsibility, the Company shall disclose the reasons of
not spending in the Board Report of that Financial Year. Provided that any amount
remaining unspent pursuant to any on-going project shall be transferred by the
company within a period of thirty days from the end of the financial year to a special
account to be opened by the company in that behalf for that financial year in any
scheduled bank to be called the Unspent Corporate Social Responsibility Account, and
such amount shall be spent by the company in pursuance of its obligation towards the
Corporate Social Responsibility Policy within a period of three financial years from the
date of such transfer, failing which, the company shall transfer the same to a Fund
specified in Schedule VII, within a period of thirty days from the date of completion of
the third financial year.

7. The Corporate Social Responsibility activities shall be undertaken as per the

Corporate Social Responsibility policies of the Company as per project or programs
excluding activities in the normal course of business.

8. The Board may decide to undertake its Corporate Social Responsibility activities
through:-

 a Company established under Sec 8 of the Act, or registered trust or registered

society established by the Company; ;( Now to receive such funds, a registration
of Trust made mandatory )
 a Company established under Sec 8 of the Act, or registered trust or registered
society established by the Central Government or State Government or any other
entity established under an Act of Parliament or a state legislature;( Now to
receive such funds, a registration of Trust made mandatory )

9. The Companies may build CSR capacities of their own personnel as well as those of
their Implementing agencies through Institutions with established track records of at
least three financial years but such expenditure including expenditure on
administrative overheads, shall not exceed 5 % of total CSR expenditure of the company
in one financial year. Provided that such Company established Sec 8 of the Act, or
registered trust or registered society shall have an established track record of three
years in undertaking similar projects or programs and the Company has specified the
projects or programs undertaken, modalities of funds and have proper reporting
mechanism.

10. Every company which ceases to be a company covered under this section of the Act
for three consecutive financial years shall not be required to comply with the provisions
of the Act, till the Company again falls in the eligibility criteria of CSR.