MCA: Submission requesting for clarification that COVID-care centres/makeshift hospitals established by employers for use by employees/ family members during COVID-19 pandemic will qualify as CSR

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MCA: Submission requesting for clarification that COVID-care centres/makeshift hospitals established by employers for use by employees/ family members during COVID-19 pandemic will qualify as CSR

Tejasvi

@tejasvi

May 10, 2021

Public Policy

As you are aware, Ministry of Corporate Affairs (MCA) recently issued General Circular No. 05/2021 dated April 22, 2021 and General Circular No. 09/2021 dated May 5, 2021 clarifying use of CorpoSR funds for setting up makeshift hospitals and temporary COVID care facilities, establishment of medical oxygen generation and storage plants, manufacturing and supply of Oxygen concentrators, ventilators, cylinders and other medical equipment for countering COVID-19.

However, despite these clarifications, the CSR cannot be used exclusively for the employees for the above permitted activities as activities benefitting employees of the company are excluded from the definition of CSR as provided in Rule 2(d) of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021.

In this regard, we have requested MCA to clarify that activities as permitted under the recent General Circular No. 05/2021 and General Circular No. 09/2021, provided to the employees should be made eligible as CSR activities during the period when the orders of the National Disaster Management Authority or the orders of the State Governments regarding the pandemic management continue to be in effect.

Further, providing the above permitted activities to the employees should not be viewed narrowly as a ‘benefit’ as it is potentially a lifesaving activity and there is an urgent need to make available every support possible to fight against this health crisis.

To illustrate, many companies (due to remote working and restriction on movement) can repurpose their office infrastructure into health infrastructure for countering the pandemic, on a temporary basis. Some companies are already doing this to great impact. A favourable response on our request above would encourage many more employers as it would address important practical challenges that companies face in using CSR funds, i.e., having to open up facilities created in their offices for general public, including concerns around security etc.

These initiatives can reduce the need to develop external premises for this purpose. Further, allowing companies to use CSR funds exclusively for employees and their families will enable industry to support their employees and potentially take some pressure off the public health infrastructure.

Our request will supplement the overall CSR efforts which are targeted at community at large, while making sure the employers are also best placed to do what ever is possible to protect their employees from the brunt of COVID-19.

We hope you will find the update useful. We will keep you posted on further developments in this regard.

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Tejasvi

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