Union Ministry of Corporate Affairs Current Affairs - 2019

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High Level Committee recommends CSR expenditure to be made tax deductible

High Level Committee (HLC) on Corporate Social Responsibility (CSR) constituted by Ministry of Corporate Affairs recommended making CSR expenditure tax deductible and to make compliance violations as a civil offence that attracts penalties. Corporate Affairs Secretary Injeti Srinivas presented the Report of the High Level Committee on CSR to Union Finance Minister Nirmala Sitharaman.

High Level Committee on CSR was constituted in October 2018 under Chairmanship of Secretary (Ministry of Corporate Affairs) to review existing CSR framework and make recommendations on strengthening CSR ecosystem, including implementation, monitoring and evaluation of outcomes.

Key Recommendations of Committee

Make CSR expenditure tax deductible.

Allow carry-forward of unspent balance for a period of 3-5 years.

Allow CSR in social benefit bonds.

Promote social impact companies.

Third party assessment of major CSR projects.

Align Schedule 7 of Companies Act (which outlines the kinds of activities that qualify as CSR) with United Nations Sustainable Development Goals (SDG).

Companies that have a CSR-prescribed amount less than Rs.50 lakh may be exempted from constituting a CSR Committee.

Violation of CSR compliance may be made a civil offence and shifted to penalty regime.

It also recommends registration of implementation agencies on Union Ministry of Corporate Affairs (MCA) portal.

Balancing priorities: Report recommends balancing local area preferences with national priorities when it comes to CSR. It also suggests introducing impact assessment studies for CSR obligations of Rs.5 crore or more.

Develop CSR exchange portal to connect contributors, beneficiaries and agencies.

Committee report emphasizes on not treating CSR as a means of resource gap funding for government schemes.

RBI constitutes panel to review Core Investment Companies

Reserve Bank of India (RBI) constituted a working group to review regulatory guidelines and supervisory framework for Core Investment Companies (CIC). The 6-member working group is chaired by Tapan Ray, non-executive chairman, Central Bank of India and former Secretary in Union Ministry of Corporate Affairs (MCA).

Key Highlights

Background: In August 2010, Central Bank on recognising the difference in business model of a holding company relative to other Non-Banking Financial Companies (NBFCs) had introduced a separate framework for regulation of systemically important.

RBI’s Objective behind forming Panel

Country’s Corporate Group structures have become more complex over the years. It now involves multiple layering and leveraging, which has further led to greater inter-connectedness with financial system through their access to public funds. Also, in light of recent developments, there is a need to strengthen corporate governance framework of CICs.

Troubled financial conglomerate Infrastructure Leasing and Financial Services (IL&FS) is registered with RBI as a CIC.

Terms of Reference for Panel

It will examine current regulatory framework for CICs in terms of efficacy, adequacy and effectiveness and will also suggest changes.

It will also suggest measures to strengthen corporate governance and disclosure requirements for CICs as well as measures to enhance RBI’s on-site supervision and off-sight surveillance over CICs.

To assess adequacy of supervisory returns submitted by CICs and also suggest changes.

Timeframe: Working Group must submit its report by 31 October 2019