India’s corporate affairs ministry has amended the CSR rules to allow corporates to carry out CSR activities through non-profit entities and societies set up by governments despite not having three years’ track record in
undertaking such projects. Earlier, only those implementing agencies that had three years of established track record in undertaking similar programmes or projects were permitted to carry out CSR work on behalf of companies.
Now, as per the modified rules, CSR activity can be done through ‘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 any entity established under an Act of Parliament or a State legislature.’
Section 8 entities, registered trusts or registered societies that have been set up by the company concerned, either alone or with another company, are also exempted from the three-year track-record requirement. This latest amendment is expected to help in ensuring optimal utilisation of funds set aside for social welfare activities.
As for entities that are not set up by a government or the company concerned, it remains mandatory to have a three-year track record to carry out CSR work. As noted in the rulebook, ‘… such company or trust or society shall have an established track record of three years in undertaking similar programmes or projects; and the company has specified the projects or programmes to be undertaken, the modalities of utilisation of funds of such projects and programmes and the monitoring and reporting mechanism.’
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