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The Companies (Amendment) Bill,2019 : A New Meaning To CSR ?

Updated: Aug 27, 2019

On 26th July,2019, Lok Sabha passed the Companies (Amendment ) Bill 2019, which seeks to amend the Companies Act 2013.

It aims :-
  • To tighten Corporate Social Responsibility (CSR) compliance

  • transfer certain responsibilities to National Company Law Tribunal and

  • reclassify certain offences as civil offences.


The Bill was moved by Finance Minister Nirmala Sitharaman in the Lok Sabha and said that bill aims to tighten CSR norms and ensuring stricter action for non- compliance of the company law regulations. On 31 July 2019, it received assent of the President of India.

Under the Bill, any unspent annual CSR funds must be transferred to one of the funds under Schedule 7 of the Act. The bill also empowers Registrar of Companies to initiate action for removal of a company’s name if the latter is not carrying out business activities as per the Act.

It re-categorised sixteen minor offences as civil defaults and transferring of functions with regard to dealing with applications for change of financial year to Central government.

The Companies (Amendment) Bill, 2019 highlights that companies with a profit of more than Rs 5 crore, turnover of Rs 100 crore and net worth of more than Rs 500 crore have to spend at least 2% of their 3 years annual average net profit towards CSR activities.

In case money remains unspent for one plus three years, the money will have to be moved to an escrow account.


By this, India has become the first country to make CSR spending mandatory through a law.


Meaning Of CSR

Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable toward themselves, their stakeholders, and the public. CSR activities can help in a successful stronger bond between employee and corporation and boost morale and can help both employees and employers feel more connected with the world around them.

What accounts are Escrow account?

An escrow account is an account where funds are held in trust while two or more parties complete a transaction. This means a trusted third party will secure the funds in a trust account and the funds will be paid out to the merchant after they have fulfilled the escrow agreement.



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