The Government of India has issued a notification amending Schedule VII of the Companies Act, 2013, through which now, the Contributions by the Corporations to PM CARES fund will now be Considered as Corporate Social Responsibility (CSR) activity. This notification was issued on May 26, 2020, and it will come into effect on May 28, 2020.
Section 467 of the Companies Act, 2013 gives the power to Central Government to amend Schedules of the Act by notification.
Section 135 of the Companies Act, 2013 lays down the scope of Corporate Social Responsibility under which every company having a net worth of rupees five hundred crores or more, or turnover of rupees one thousand crores or more or a net profit of rupees five crores or more during any financial year is required constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director has to be an independent director.
SCHEDULE VII of the Companies Act, 2013 lists activities which may be included by companies in their Corporate Social Responsibility Policies Activities such as eradicating extreme hunger and poverty, promotion of education, promoting gender equality and empowering women, reducing child mortality and improving maternal health, combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases, ensuring environmental sustainability, employment enhancing vocational skills and social business projects among the others.
Contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women is also considered as CSR activity and with this new notification, contribution to PM CARES is also included in the list.
PM CARES fund is aimed at strengthening the fight against Coronavirus and further availability of quality treatment and encourage research. But it is not away from criticism, as the main opposition Congress party has said that the new fund lacks transparency, and questioned it as to why it was created when the Prime Minister's National Relief Fund, which was set up in 1948 and has a balance of 38 billion rupees ($498.6 million) was already in place. Congress Party also questioned as to why it could not be merged with the older fund.
