CSR amendments appear to be on hold

By keeping the implementation of Section 21 of the Companies (Amendment) Act 2019 in abeyance, the government of India appears to have put on hold the draconian amendments proposed under section 135 of the Indian Companies Act 2013. Under Section 21 of the Companies (Amendment) Act 2019 three new sub-sections have been added to Section 135 besides a change in sub-section (5) of Section 135.

Section 21 of the Companies (Amendment) Act 2019 can be read at: http://www.mca.gov.in/Ministry/pdf/AMENDMENTACT_01082019.pdf

Holding back implementation of Section 21

Ministry of Corporate Affairs (MCA) while going ahead with implementation of all other provisions in the Companies (Amendment) Act 2019 appears to have put implementation of Section 21 of the Companies (Amendment) Act 2019 on hold, probably till the government of India decides on the recommendations of the High Level Committee which is headed by MCA Secretary Injeti Srinivas.

What this means?

There are several possibilities and one can only make a guess.

a) MCA may maintain status quo in the law (i.e. the way it has been since Section 135 came into force from fiscal year 2014-15);

b) MCA may consider modifying the amendments under Section 21 of the Companies (Amendment) Act 2019, after taking into consideration the recommendations of the High Level Committee, in the winter session of Parliament;

c) MCA could issue an ordinance modifying the amendments under Section 21 of the Companies (Amendment) Act 2019, after taking into consideration the recommendations of the High Level Committee.

Conclusion

Companies may breathe easy for now.

The draconian amendments proposed under Section 21 of the Companies (Amendment) Act 2019 are likely to be watered down and some of the positive and forward looking recommendations made by the High Level Committee may get considered.