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CMA Final · Corporate and Economic Laws · Corporate Governance and Social Responsibility and Sustainability

A company fails to spend its CSR amount for a financial year, and the unspent amount does not relate to any ongoing project. According to section 135(5), what must the Board do?

The Board must state the reasons for not spending in its report under section 134(3)(o) and transfer the unspent amount to a Schedule VII Fund within six months of the end of the financial year. The Unspent CSR Account route applies only to ongoing projects.

  1. ACarry the amount forward to the next year without any disclosure
  2. BSpecify the reasons in its report under section 134(3)(o) and transfer the unspent amount to a Fund specified in Schedule VII within six months of the expiry of the financial yearCorrect
  3. CTransfer the amount to the Unspent CSR Account within thirty days and spend it over three years
  4. DPay the amount to the Central Government as a penalty within thirty days

Explanation

The second proviso to section 135(5) requires reasons to be given in the Board's report and, where the amount is not for an ongoing project, transfer to a Schedule VII Fund within six months of the end of the year. The thirty-day Unspent CSR Account route under section 135(6) applies only to ongoing projects.

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