Companies Act 2013 Amended To Make PM CARES Eligible To Receive CSR Funding From Corporates

Highlights

Now, corporates can fund the government under CSR activity. Gazette notification to this effect was released by the Narendra Modi government under which the PM CARES fund can receive funds from corporates as part of their corporate social responsibility.

Now, corporates can fund the government under CSR activity. Gazette notification to this effect was released by the Narendra Modi government under which the PM CARES fund can receive funds from corporates as part of their corporate social responsibility.

The Union Ministry of corporate affairs brought in this notification on May 26 according to which there is an amendment to the subsection (1) of section 467 of the Companies Act 2013. The new amendment to the Companies Act makes PM CARES fund eligible to receive CSR funding from corporates. This is the same theory that applies to the Prime Minister's National Relief Fund too.

The latest Gazette notification states that In Schedule VII, item (viii) after the words 'Prime Minister's National Relief Fund', the words 'or Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)' shall be inserted.

Interestingly, this will be implemented with a retrospective effect and shall deem to have come into force on March 28, 2020.

This simply means that it works in favour of companies which had donated funds to the PM CARES soon as it was set up to fight the coronavirus pandemic. So all those donations made by corporates since March 28 to the PM CARES fund will be treated as contributions under corporate social responsibility. This comes as a huge relief to those corporates who made large donations to the fund.

Observers feel that this move by the BJP led government at the Centre will likely trigger objections as was the case when the PM CARES was set up to mitigate the COVID crisis. Analysts had argued that there was no need for a new fundraiser as PM Relief Fund could have been used for the same.

It may be recalled that funds poured into the PM CARES account from big businessmen, corporate houses, sports stars and film celebrities.

This move by the government could also lead to a situation wherein PM CARES will receive all the CSR funding from big corporates wanting to score a brownie point with the government while NGOs and other Non-profit organizations will take a beating. They may not get the required funding for public service activities as big corporate houses would prefer to divert funds to the government fund to be in their good books or seek favours in crisis.