MCA notifies Section 37 of Companies (Amendment) Act,2017 to come into force from September 19, 2019. The respective section refers to Section 135 (Corporate Social Responsibility) of the Companies Act, 2013.
The Companies (Amendment) Act,2017 amends Section 135 (1) (a) wherein any companies that have net worth of Rs. 500 crore or more, or turnover of Rs. 1000 Crore or more or a net profit of Rs. 5 crores or more during “the immediately preceding financial year” are required to create CSR committee. Prior to the amendment, the net worth or turnover or net profit was considered to be of any financial year. Thereafter, in the same provision, the proviso has been inserted which allows the company not to appoint independent directors u/s 149 (4) but to include 2 or more directors in CSR committee.
There has been an amendment in the explanation specified under Sec. 135 (5) which refers to the calculating CSR expenditure. As per the amendment made by Section 37 of the Companies (Amendment) Act,2017 while calculating CSR expenditure net profit will not include in such sums as prescribed and would be calculated in accordance with Section 198.