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Himalaya Foods Ltd spent less than its required CSR amount in a financial year, and the shortfall does not relate to any ongoing project. What does section 135(5) require of the Board?

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 Unspent CSR Account route applies only where the shortfall relates to an ongoing project.

  1. ACarry the amount forward indefinitely 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 end of the financial yearCorrect
  3. CTransfer the amount to an Unspent CSR Account within thirty days and spend it within three years
  4. DPay the amount to the company's promoters as a CSR reserve

Explanation

The second proviso to section 135(5) requires reasons in the Board's report and, unless the amount relates to an ongoing project, transfer to a Schedule VII Fund within six months of the end of the financial year. The Unspent CSR Account route in option three applies only to ongoing projects under section 135(6).

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