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CSEET · Economic and Business Environment · Elements of Corporate Governance

A company fails to spend its full CSR amount, and the unspent sum does not relate to any ongoing project. What must the Board do under Section 135?

The Board must state the reasons for non-spending in its report and transfer the unspent amount to a Fund specified in Schedule VII within six months of the end of the financial year. The thirty-day 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 and transfer the unspent amount to a Fund specified in Schedule VII within six months of the expiry of the financial yearCorrect
  3. CTransfer it to the Unspent CSR Account within thirty days and spend it within three years
  4. DPay it as a penalty of twice the amount to the company's own reserves

Explanation

The second proviso to Section 135(5) requires the Board to give reasons in its report and, unless the amount relates to an ongoing project, transfer it to a Schedule VII Fund within six months. The thirty-day Unspent CSR Account route applies only to ongoing projects under sub-section (6).

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