Under the Companies Act, 2013, a certain class of profitable companies are required to shell out at least two per cent of their three-year average annual net profit towards CSR (Corporate Social Responsibility) activities in a particular financial year.
"This amendment is aimed at providing significant ease of compliance to the companies and will also help Not for Profit Organisations (NPOs), to raise funding for public welfare projects in a transparent and regulated manner.
Expenditure incurred by the CSR-mandated companies for such instruments shall not exceed ten per cent of the total CSR expenditure for the particular financial year.
Anshul Jain, Partner Regulatory at consultancy PwC India, said companies can now invest their CSR funds into such instruments issued through an SSE.
It helps in furtherance of a transparent and credible mode of funding CSR projects by the companies and enables social enterprises to access a wider pool of capital, Jain said.
