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MCA issues fresh circular for COVID-19 support in the form of
CSR contributions
The resurgence of COVID-19 has resulted in pressure surmounting on an already burdened system of medical infrastructure in India. The shortage of oxygen has compounded the worry and scare caused by COVID-19, which is on the rise again. In view of this situation, the Ministry of Corporate Affairs (MCA) has issued General Circular No. 09/2021 on 5 May 2021. This circular provides clarification on spending of Corporate Social Responsibility (CSR) funds for creating health infrastructure for COVID care, establishment of medical oxygen generation and storage plants’ etc.
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Overview of General Circular No. 09/2021
The MCA via General Circular No. 10/2020 dated 23 March 2020, clarified that spending of CSR funds for COVID-19 is an eligible CSR activity. In continuation to this clarification, the MCA has pronounced that the spending of CSR funds on the following would qualify as eligible CSR activities under item nos. (i) and (xii) of Schedule VII of the Companies Act, 2013:
- Creating health infrastructure for COVID care
- Establishment of medical oxygen generation and storage plants
- Manufacturing and supply of oxygen concentrators, ventilators, cylinders, and other medical equipment for countering COVID-19
- Activities similar to the ones mentioned in (a) to (c) above
- Item (i) of Schedule VII covers activities for promoting health care, including preventive health care
- Item (xii) of Schedule VII covers disaster management, including relief, rehabilitation, and reconstruction activities.
This circular also draws reference to item (ix) of Schedule VII of the Companies Act, 2013 which permits contribution to specified research and development projects as well as contribution to public-funded; universities and certain organizations engaged in conducting research in science, technology, engineering, and medicine as eligible CSR activities.
Reference to General Circular No. 09/2021
http://www.mca.gov.in/Ministry/pdf/GeneralCircularNo9_05052021.pdf |
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Our Comments
General Circular 09/2021 comes on the heels of General Circular 05/2021 on 22 April 2021, where setting up of makeshift hospitals and temporary COVID care facilities would be eligible to qualify as a CSR activity under item nos. (i) and (xii) of Schedule VII of the Companies Act, 2013. These are testing times and help from every quadrant of the society shall empower us to fight and recover from this pandemic. MCA allowing the above activities to qualify as CSR spends shall encourage corporate India to allocate CSR funds towards medical infrastructure and oxygen supply which are the burning needs of the hour. These clarifications by the MCA are a rallying call for eligible corporates to contribute to the efforts of the government, while ensuring compliance with applicable regulations, to help India fightback from the clutches of the pandemic​.
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