Background Section 135 of the Companies Act, 2013 mandates companies with a net worth of INR 500 crore or more/turnover of INR 1000 crore or more/net profit of INR 5 crore or more during any financial year, to spend 2% of their average net profit on corporate social responsibility (CSR). Schedule VII of the Companies Act prescribes the activities that can be called as CSR activities. CSR Rules, 2014 defines several compliance requirements pertaining to CSR activities, CSR Committee, CSR Policy, CSR Expenditure, CSR Reporting, and display of CSR activities on the company website. The CSR Rules were amended in 2021 vide Notification No. E-F. No. CSR-05/3/2020-CSR-MCA dated 22.1.2021 . The amendment mandated companies which undertake CSR activities to register with the Central Government by filing the form CSR-1 electronically. The 2021 Rules have been further amended by the  Ministry of Corporate Affairs via Notification No. G.S.R-715(E) dated 20.09.2022 . ANALYSIS OF 2022 AMENDMENT TO CSR RULES AND IMPACT ON NON-PROFITS Some highlights of the 2022 amendment and their impact are discussed below: Constitution of CSR Committee As per the new amendment, according to Section 135(6) of the Companies Act, a company having any amount in its ‘Unspent Corporate Social Responsibility Account’ shall mandatorily constitute a CSR Committee. The CSR Committee will monitor the unused funds set aside in this designated account and these funds must be used within three financial years. Impact: Earlier, relaxation was given to companies to not form a CSR committee if they no longer satisfy the required criteria. Reconstitution of CSR committees will be required in case of such companies which have dissolved the CSR Committees pursuant to Section 135(9) but have any amount in Unspent CSR Account w.r.t. ongoing project(s). Revision in limits of expenditure on impact assessment Expenditure on impact assessment reports is now allowed at 2 percent of total CSR expenditure or Rs. 50 Lakhs, whichever is higher. The earlier rule had allowed up to 5% of the total CSR spending or ₹50 lakh whichever is less. Impact: The amendment permits greater impact assessment spending in the event of substantial CSR projects, which is beneficial for the non-profits. Commission of Rule 3(2) and alignment with Section 135(1) Earlier, CSR provisions were no longer applicable when a company ceased to meet the threshold requirements for CSR obligation for three consecutive years. In this new amendment, this rule (Rule 3(2)) has been omitted. So once CSR provisions become applicable, it will remain applicable. Widening the category of entities that can be appointed as implementing agencies The new amendment states that, Companies under Section 8 of the Act, registered public trusts or registered societies that are exempted under sub-clauses (iv), (v), (vi) or (via) of Section 10 (23C) which are also approved under 80G of the Income Tax Act, 1961 and with which have an established track record of at least 3 years in undertaking similar activities are eligible to act as implementing agency. Earlier only entities registered under section 12A and approved under Section 80G of the Income Tax Act, 1961 were only recognised to act as implementing agencies. Impact:   The scope of CSR recipients is now widened to educational institutions who are exempted under prescribed clauses of Section 10(23C) of Income Tax Act, 1961 and holding the exemption under Section 80G, subject to registration with Ministry by filing form CSR-1. Formation of Annual Report on CSR AND disclosure in board's Report Detailed information with respect to  on-going projects is now not a part of disclosure in Board report.  The new change requires the companies to provide the executive summary along with the weblinks of impact assessment of CSR projects. Details excluded in the new reporting format include the following: name, location, amount allocated by the company for the project, duration of the CSR project, amount spent in the current financial year on the project, mode of implementation, name of the implementing agency and their CSR registration number, and amount transferred to the unspent CSR account. If the company fails to spend 2% of the average net profits of the three immediately preceding financial years, reasons for the same should be provided in the annual report and the annual report should be annexed to the Board’s report.

The main issue considered by the court was the interpretation of Section 10(23C)(iiiad) of the Income Tax Act. Under Section 10(23C)(iiiad) of the Income Tax Act, income received by any university or educational institution existing solely for educational purposes and not for purposes of profit, is fully exempt from tax. To secure such exemption, the institution (NGO) should make an application to the Principle Commissioner or Commissioner of Income Tax. The Supreme Court has held that: i. Approval under Section 10(23C) of the Income Tax Act cannot be given to an institution that has multiple objectives, one of which is education, and that “solely” means that the institution must exist singularly for the purpose of education, without any other non-education related objectives. This interpretation will apply prospectively, not retrospectively. ii. Though, there is no bar on accrual of surplus income, accrual of surplus should only be as a result of an educational activity. iii. While considering an application for approval under Section 10(23C), the commissioner can call for any documents to ascertain the authenticity and manner of functioning of any institution. iv. Wherever registration of trust or charities is obligatory under state or local laws, the concerned trust, society, other institution etc. seeking approval under Section 10(23C) should also comply with provisions of such state laws. Facts of the case The appellants had filed an appeal before the Supreme Court after its claim of registration as a fund or trust or institution or any university or other educational institution (hereinafter collectively referred to as “institution / trust”) set up for the charitable purpose of education, under the Income Tax Act, 1961 (hereinafter, “IT Act”) was rejected by the Andhra Pradesh High Court. The Andhra Pradesh High Court held that the appellant trusts which claimed benefit of exemption under Section 10 (23C) of the IT Act were not created ‘solely’ for the purpose of education, and that to determine that issue, the court had to consider the memorandum of association or the rules or the constitution of the concerned trust. Additionally, the appellants were denied registration on the ground that they were not registered under the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987 (hereinafter, “A.P. Charities Act”) as condition precedent for grant of approval. It was the appellant’s arguments that such a precondition was absent in the provisos to Section 10(23C) (vi) of the IT Act, and that since the tax statute was a complete code in itself, other acts such as A.P. Charities Act could not form the basis for denying approval. What the Andhra Pradesh High Court Held However, the Andhra Pradesh High Court rejected the appellant’s arguments and interpreted Section 10(23C) (vi) of the IT Act by placing reliance on previous judicial precedents. These judgments recognized that in order to be eligible for exemption, under section 10(23C)(vi) of the Act, it is necessary that there must exist an educational institution. Secondly, such institution must exist solely for educational purposes and, thirdly, the institution should not exist for the purpose of profit. Therefore, there were three questions for consideration before the Supreme Court- i. What is the correct interpretation of the term ‘solely’ in Section 10 (23C) (vi) which exempts income of “university or other educational institution existing solely for educational purposes and not for purposes of profit ii. What is the proper manner in considering any gains, surpluses or profits, when such receipts accrue to an educational institution, i.e., their treatment for the purposes of assessment? iii. Whether registration of charitable trust is mandatory under local or state laws? Analysis and Conclusion The Supreme Court placed reliance on the judgment in T.M.A Pai Foundation which provided a  narrower meaning of the term education  as scholastic structured learning as reflected by Article 21-A, Articles 29-30 and Articles 45- 46 of the Constitution. The court also reiterated previous jurisprudence that trade and commerce under the guise of “general public utility” would not be amenable to avail income tax exemptions. The first part of the judgment deals with the issue of – institutions existing solely for profit as well as the examination of the term ‘solely’. The court observed that term ‘solely’ is not the same as ‘predominant / mainly’. The term ‘solely’ means to the exclusion of all others and therefore charitable trusts shall operate solely with the objective of imparting education or related activities. The court also observed that the second proviso to Section 10(23C), which refers to the procedure for approval of applications including those made by trusts and institutions imparting education, imposes no restrictions on the commissioner that prevent him from calling for auditing documents or other documents for ascertaining the manner or functioning of the institution. In light of these observations, the Supreme Court denied the appellant’s appeal.

Facts of the case The Petitioner met with an accident while discharging his duties in employment and became disabled. Due to such disability, he could not attend his duties.  However, the Petitioner was willing to join his duties to commensurate to his disability. Upon reference to it, the Standing Medical Board submitted a report dated 18.02.2020 that the Petitioner was not in a position to perform his official and field level activities. The Board also observed that the condition of the Petitioner may improve. Treating his absence from duty as unauthorized, the Petitioner was paid salary only up to 16.03.2020 and  thereafter, he was not paid salary and other allowances. Challenging this, the Petitioner filed a writ petition before the Hon’ble High Court of Tripura. The High Court allowed the writ filed by the Petitioner. Order The Hon’ble High Court relied on the Office Memo dated 25th February, 2015 issued by the Government of India, Ministry of Personnel, Public Grievances & Pensions, and noted that the Office Memo mandated the State-employer to create conditions in which the barriers posed by disability can be overcome. The Court also noted the fact that the Petitioner’s joining report and leave application was refused by the Respondent on the ground that the Petitioner did not report to the joining authority in person. The Court held that the conduct of the Respondent is not in consonance with the Rights of Persons with Disabilities Act, 2016 (RPwD Act) . The Court further observed that the Respondents should have realized the challenge the Petitioner has been facing and should have accommodated him with a humane approach. The High Court directed the Respondents to "reasonably accommodate" the Petitioner and further ordered that: a) The Respondents to pay all the cumulative dues such as salary, allowances, etc payable to the Petitioner under his service conditions within a period of three month from the date of order. b) The Respondents to regularize the Petitioner’s service conditions by recalling all the earlier orders treating his absence from duty as unauthorized absence. c) If the Petitioner is found eligible to perform his duty, then, he may be permitted to undertake such duties. Further, if the Petitioner is found to be unfit to perform the nature of duties, which he was performing before being disabled, then, he should be assigned such suitable duties which he would be able to discharge. d) If the Petitioner is not able to perform any kind of duties, then, the Respondents are under obligation to pay all service benefits including the promotion to the Petitioner by creating a supernumerary post until a suitable post is available or he attains the age of superannuation. ( A supernumerary post is a post created for accommodating a permanent officer till he is absorbed substantively in a regular permanent post) e) The Respondents shall utilize the capacity of the Petitioner by providing an amiable environment and reasonable accommodations. f) The Petitioner to appear before the constituted Medical Board of the State Government within 7(seven) days from the date of order. The Medical Board shall examine and issue certificate mentioning the extent of his disability in consonance with the RPwD Act; and g) To refrain from sending the Petitioner to the Medical Board time and again. Pacta’s Analysis on the Impact of the Order Reasonable accommodation as defined under the RPwD Act means appropriate modification and adjustments, without imposing a disproportionate or undue burden in a particular case, to ensure persons with disabilities enjoy or exercise their rights equally with others. The RPwD Act also imposes obligations on the State and private parties to afford additional support to persons with disabilities to facilitate their full participation, such as ensuring accessible buildings, transport facilities and quota in public sector employment. The recently released Draft Policy for Persons with Disabilities (Divyangjan), 2021 also identifies various provisions for the full participation of disabled persons. The policy proposes a national level employment portal for disabled persons for reporting vacancies, eligibility criteria, recruitment process, counselling etc., and to develop an e-platform for skilling the disabled persons. Despite several laws and policies that affirm the rights of people with disability, justice still remains elusive, often requiring court proceedings such as this to affirm their rights.

The Foreign Contribution (Regulation) Act, 2010 (‘FCRA’) is applicable to all non-profits which receive foreign donations. It is mandatory to register foreign funded NGOs under the FCRA and the registration shall remain valid for a period of 5 years, after which it can be renewed for a further period of 5 years. The Central Government vide Notification No. GSR 506(E) dated 01.07.2022 through Foreign Contribution (Regulation) Amendment Rules, 2022 amended the FCRA Rules, 2011 which came into effect from 1st July 2022. The Government introduced 7 key amendments in the FCRA Rules: Rule 6: Change: Threshold limit raised to Rs. 10 Lakh Impact: Receipt of foreign contribution from foreign relatives to be intimated in FC-1 if it exceeds Rs. 10 Lakh (current limit is Rs. 1 Lakh) Change: Time Limit extended to 3 months Impact : Such intimation in FC-1 shall be made within a period of 3 months ( presently 30 days) Rule 9: Change: Time Limit extended to 45 days [Rule 9(1)(e)] Impact: Filing of Form FC-6D within 45 days instead of 15 days for FCRA registered entities Change: Time Limit extended to 45 days [Rule 9(2)(e)] Impact : Filing of Form FC-6D within 45 days instead of 15 days for entities with prior FCRA permission Rule 13(b): Change: Omitted Impact: Requirement of Quarterly publication of FC receipts on website dispensed with  Rule 17A: Change: Time Limit extended to 45 days Impact: Time limit for filing Forms FC-6A to FC-6E increased to 45 days from 15 days  Rule 20: Change: Form for application for Revision of orders Impact: Instead of making on a plain paper, it shall be in the prescribed form to be filed electronically.

Forms 10BD and 10BE for the FY 2021-22 falls due on May 31, 2022; Forms are now available on Income Tax portal Background Till the introduction of Form 10BD, Government had no method to verify whether the claims of deductions u/s 80G made by the taxpayer were correct. In order to bring transparency in the system, CBDT issued a Notification no. 19/2021 dated 26th March 2021 [1] notifying a Form 10BD to be filed by specified institutions providing specific details of donations made by donors and further notifying a Form 10BE certificate of donation which taxpayers require to claim the deduction u/s 80G of the Income Tax Act.   Form 10BD It is a statement of donations received to be filed mandatorily as per Sections 80G (5)(viii) and 35(1A)(i) of the Income Tax Act (IT Act). Form should be furnished electronically using DSC or EVC. If no donation is received during the financial year, then there is no requirement for filing the Form. Persons required to file Form is required to be filed by the following :- a)     Institutions or Funds referred to in Section 80G(2)(a)(iv)of the IT Act and eligible to collect donations and issue receipts for claiming the deduction under Section 80G, b)     Institutions incurring expenditure on research specified u/Section 35(1) (ii) [2] /(iia) [3] / (iii) [4] of the IT Act. Due date for filing The last date to submit the statement in Form 10BD is 31st May immediately following the end of the financial year in which the donation was received. Details required for filing Details of donor (name, ID Proof, address), donation type, mode of receipt and the amount are required to be furnished. To facilitate ease filing, it is suggested that a donor register should be maintained to capture the details all through the year. Process of filing The process should be handled by an experienced professional in the organization namely the Chartered Accountant / Auditor. Form 10BD is available Online under tab “E-File” in the income Tax Portal E-verification of Form is mandatory either through DSC or EVC-4.   Form 10BE After filing the statement of donations in Form 10BD, the above mentioned institutions have to download the certificate in Form 10BE and provide the same to donors. The last date to issue a certificate to donor in Form 10BE is 31st May immediately following the end of the financial year in which the donation was received. Liability in case of noncompliance If the reporting entity does not file Form 10BD or issue a certificate to the donor in Form 10BE within the prescribed due date, then late fees of Rs. 200 per day shall be levied for the period of delay . [5] However, the maximum fees for the delay shall not exceed the amount of the donation for which the failure has occurred. Apart from the fee for delay in furnishing Form 10BD and Form 10BE, the noncompliance will also attract a penalty which shall not be less than Rs.10,000/- and which may extend up to Rs.1,00,000/-. [6]   [1] https://incometaxindia.gov.in/communications/notification/notification_19_2021.pdf [2] An institution/association/university/college approved and notified by Central Government having the main objective of undertaking of scientific research. [3] A company registered in India and approved by the prescribed authority having the main objective of undertaking scientific research and development. [4] An institution/association/university/college approved and notified by Central Government having the main objective of undertaking of research in social science or statistical research. [5] Section 234G of the IT Act [6] Section 271K of the IT Act

We make these recommendations taking into consideration the challenges faced by children and students with neuro-developmental disabilities (ASD, ADHD etc) in writing examinations. Our recommendations are divided into 3 sections: Section A – Suggestions for re-articulating certain clauses of the Draft Guidelines Section B – Suggestions for Inclusion of Additional Provisions Section C – General Concerns in the Guidelines Click here to Read More

A grant agreement crystallises the terms under which one party agrees to grant funds to the other, mostly for achieving a social purpose. Grant agreements are executed between organizations (usually not-for-profits/trust/societies) which are seeking funds/grants and organisations like CSR of for-profits/ HNIs/philanthropies that are making the grant.    What can an NPO expect in a grant agreement and how to review it ? We give below some standard components of a domestic grant agreement (within India) with tips to review it congenially for an NGO:  Purpose of the grant:  Grant agreements must clearly articulate the purpose for which the grant funds are provided and the manner in which it can be used. Giving specifics like a budget, program components, beneficiary numbers etc is recommended over generic language to avoid any dispute later. Amount of grant funds:  The agreement should mention the total amount of the grant that will be given to the grantee, exact disbursement dates and the manner in which the same will be transferred to the grantee. Grant Period:  The parties should agree on a term period that will be reasonably required to achieve the purpose for which the grant is provided. This will also ensure that the grantee completes the purpose/project for which the grant is given during this period.  Disbursement of funds:  Grant funds are typically given in tranches rather than in a form of a lump sum payment. The disbursements are subject to the grantee showing that it has exhausted the funds under the previous tranche. It is common practise for the grantor to reserve the right to modify future disbursements if the grantor finds that the grantee has not adequately achieved the milestones or outcomes from the previous tranches.      Utilisation of grant funds : Obligations are imposed on the grantee to provide periodic reports to the grantor showing progress towards achieving the agreed results and outcomes. Grantees are often expected to share the annual financial report signed by an independent auditor along with a fund utilisation statement. Grantees must therefore ensure that they have the resources to prepare these reports and plan their activities so as to prepare the grant reports within the specified timelines. Often failure to comply with reporting terms for the utilization of funds may result in penalizing the grantee. Audits:  The grantor would reserve the right to conduct audits, reviews and site visits during the term of the grant period. However, grantee must insist that reasonable prior notice be given.  Termination:  Termination must always be mutual i.e may be initiated by either party. However, the grantor may hold the right to terminate the agreement with immediate effect if the grantor has reason to believe that the grant funds are not being used in the intended manner or for the purpose intended or for breach of the terms and conditions of the grant agreement. In event of such termination by the grantor, the grantor will not make any further disbursements to the grantee and may even provide for any unspent funds to be returned to the grantor. Often the termination clause is one-sided. Review it to balance the interests. Indemnity:  It is important to have a properly drafted mutual indemnity clause so that the parties can indemnify each other for any losses or liabilities caused by the other or resulting from any act or omissions of the other party or other party’s breach or  misconduct. We often find that the indemnity is one sided. Confidentiality:  A confidentiality clause will ensure that each party’s proprietary information is protected from any unauthorised disclosures made by either party. Parties must remember that there are certain global and domestic laws governing data privacy which must be adhered to at all times. Intellectual Property:  Since grant agreements are executed for carrying out projects that have an impact on the society at large, any IP created or developed by the grantee during the grant period can be either - shared between the parties or marked as open source, public source or freeway intellectual property. It will be important to build in clauses preventing commercial use of IP generated, acknowledging the other party in any reports or publications and placing any restrictions on using each other’s names, logo etc.  Force Majeure:  This clause has gained enormous significance due to the pandemic. The lockdown witnessed many parties of a contract enforcing the force majeure clause as the objective of the contract could not be carried out due to a regulation from the government which was out of the control of the parties. For example, if a grantee requires a field survey to be conducted and the Government declares a lockdown, the grantee can invoke the force majeure clause. This clause will relieve the parties from performing their obligations under the agreement without any liability for the duration of the force majeure event.   Dispute Resolution & Jurisdiction:  Lastly, a grant agreement would have a dispute resolution clause to resolve any disputes that may arise between the parties during the term. Also, if the parties are situated at different geographical locations, the parties should decide as to which of the courts will have jurisdiction over the disputes arising out the grant agreement.    A grant agreement need not be one-sided. While it must ensure that that the grantee complies with applicable laws, achieves intended outcomes and reports fund utilization meticulously, it must not exploit the position of the grantee as a receiver of funds.   Pacta   reviews and drafts grants documentation for non-profits. Do reach out to us in case you need assistance on your grant agreements.

Personal and sensitive data might be collected for various purposes. For instance: Human Resource Management Personal and Sensitive Personal Data of permanent employees and contractual workers.  Personal Data of job applicants and interns For Research Studies Sensitive and personal data of research subjects. This may include a wide array of personal and sensitive information based on the scope of the study, such as name, address, date of birth, caste, health history, annual income etc Sensitive and personal data collected for impact measurement projects.  Data Collected for journalistic purposes Other Instances Personal and Sensitive data of customers  Personal data of visitors to the office building Mailing lists Let us look at some existing as well shortly expected legal compliance obligations pertaining to data protection and privacy that non-profits will have to ensure in their activities. The Law on Personal and Sensitive Data If a non-profit collects personal and sensitive data, it is required to follow the rules made under the Information Technology Act, 2000. This includes legal obligations regarding collection of information, transfer/Disclosure of data, security practices and procedures for storage and so on. Central Rules[1] mandates the  provision of a privacy policy  on the website of all body corporates which collect personal and sensitive data. Further, it requires all body corporates to designate a Grievance Redressal Officer devoted for timely redressal of grievances. It also mandates implementation of reasonable security practices, procedures and standards to ensure security of the collected data.  As per the Section 43A of the Information Technology Act, 2000, all body corporates are responsible for implementing and maintaining reasonable security measures to ensure no wrongful loss/gain is done to any person due to processing, dealing, or handling of sensitive personal information. Failure of this can attract liabilities to pay damages. This applies to all non-profits – including trusts, societies, section 8 companies or any association of individuals engaged in professional activities. Individuals who have access to personal information under a contract are also responsible for the protection of personal information under Section 72A of the same Act. Disclosure of any personal information without consent of the person or in breach of the contract can attract a punishment of fine and imprisonment.  Central Rules  Central Rules made under the Information Technology Act mandates the  provision of a privacy policy  on the website of the body corporate. Access to this policy by subjects who provide sensitive information must be ensured. The privacy policy must include:  Clear and easily accessible statements of its practices and policies; Type of personal or sensitive personal data or information collected;  Purpose of collection and usage of such information; Disclosure of information including sensitive personal data or information; and Reasonable security practices and procedures undertaken. Good Practices to Implement Re: Data Collection, Processing & Storage:  Having a legal basis for securing the information via consent form/ agreement Obtaining written consent from the provider of sensitive information Informing the provider of the purpose of usage of such collection Collection of information only if:  There is a lawful purpose connected with a function of activity of the body corporate or any person on its behalf; and  Sensitive personal data or information is considered necessary for that purpose. Encryption of data to ensure safekeeping Data anonymization to ensure that any information cannot be traced back to the data principle (If possible) Limiting access to personal and sensitive data through multiple levels of security measures Caution while transferring personal or sensitive data (through informed and implicit consent)– via proper confidentiality obligations in contracts/MOUs                  Timely disposal/erasure of data &robust data retention policies Have the following policies tailored to your organization’s activities and risk levels: Data protection policy Privacy policy Cookies policy Data Processing Policy Data Retention policy Data protection clauses in agreements with third parties processing the data Foreseeable Changes in Data Protection Laws The landscape of data protection laws is expected to change upon the passing of Personal Data Protection Bill, 2019. The bill provides for several new requirements like data de-identification, encryption, and anonymization. Some of the new legal introductions that the bill envisages are: Restriction on the storage of personal data outside India. Restrictions on the transfer of critical personal data (as notified by the central government) for processing outside India. Specific obligations in obtaining/ processing of information pertaining to children In addition there are proposed laws such as the Digital Information Security in Healthcare Act, 2018 (DISHA) and various regulatory frameworks being proposed on maintaining the confidentiality of personal, non-personal and medical data. NGOs must start adopting healthy practices recognising the value of data to ensure that the privacy of its data subjects are protected and that data is not illegally mined.   [1] The Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011

The Ministry of Corporate Affairs (MCA) has notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the “CSR Rules”) with effect from January 22, 2021. In Brief - How do these rules impact non-profits? Section 8 companies, trusts and societies seeking CSR funding to register on the MCA portal with effect from April 1, 2021 by filing form CSR 1.This may be done through practising company secretary/chartered accountant/ cost accountant. Registration of Trust/Society/ Sec.8 company is also a pre-condition for applying CSR funds towards capital assets. NGO’s having done so in the past also must register under MCA. Companies can collaborate with organisations mentioned in item (ix) of Schedule VII of the Companies Act, 2013 to undertake research and development activity of new vaccine, drugs and medical devices related to COVID-19 for the financial years 2020-21, 2021-22, 2022-23. Organizations involved in training of Indian sports personnel representing any State or Union territory at national level or India at international level can seek CSR funds. Registered Sec 8 companies, trusts and societies under Section 12A and 80G of the IT Act, having an established track record of 3 years in undertaking similar activities will continue to qualify for CSR funding. This is a relief because under the draft CSR rules proposed in March 2020, only Section 8 companies were so eligible. As the CSR Rules mandate companies to plough back any surplus funds arising out the CSR projects into the same project, this is an opportunity for NPOs to seek funds to complete any incomplete projects. In a first, the new CSR Rules now allows CSR to be applied towards creation/acquisition of capital assets for self-help groups/ collectives. Impact assessment now mandated in case of high value projects. In detail, here is how the Amendment to the CSR Rules will impact non-profits receiving CSR funding: CSR activity to include research and development for COVID-19 Companies undertaking research and development activity of new vaccine, drugs and medical devices in their normal course of business can continue to undertake such related to COVID-19 for financial years 2020-21, 2021-22, 2022-23; provided (a) such research and development activities are carried out in collaboration with any of the institutes or organisations mentioned in item (ix) of Schedule VII to the Companies Act, 2013 (the “Act”)[1]; (b) details of such activity is disclosed separately in the annual report on CSR included in the Board’s Report. CSR activity to include training of Indian sports outside India Training of Indian sports personnel representing any State or Union territory at national level or India at international level will now come under CSR activity. CSR Implementation allowed through Trusts /Societies  CSR obligations can be fulfilled by a Company through: a. a Section 8 company or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961 established by the company, either singly or along with any other company, or b. a Section 8 company or a registered trust or a registered society, established by the Central Government or State Government; or c. any entity established under an Act of Parliament or a State legislature; or d. a Section 8 company or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least 3 years in undertaking similar activities. Register with Central Government by April 1, 2021 Section 8 companies, trusts and societies seeking CSR funds must now register itself with the Central Government by filing Form CSR-1 electronically with the Registrar of Companies with effect from April 1, 2021. Form CSR-1 has to signed and submitted electronically by the entity and has to be verified digitally by a Chartered Accountant in practice or a Company Secretary in practice or a Cost Accountant in practice. On the submission of the Form CSR-1 on the portal, a unique CSR Registration Number shall be generated by the system automatically. However, this will not affect CSR projects or programmes approved prior to April 1, 2021. Surplus to be transferred to “Unspent CSR Account” Any surplus arising out of the CSR projects shall be ploughed back into the same project or shall be transferred to the “Unspent CSR Account” and to be spent as per CSR policy and action plan of the company or transfer such surplus amount to a fund specified in Schedule VII , within a period of 6 months of the expiry of the financial year. CSR for creation of capital assets The CSR amount may be spent by a company for creation or acquisition of assets which shall only be held by a Section 8, a registered public trust or registered society; beneficiaries of the said CSR project, in the form of self-help groups, collectives, entities; or a public authority Capital assets created by a company prior to the commencement of the CSR Rules, shall within a period of 180 days from the date of commencement comply with the requirements of this rule, which may be extended to a further period of 90 days with the approval of the board of the Company based on reasonable justification. Impact Assessment Companies can undertake impact assessment, through an independent agency of their CSR projects having outlays of 1 crore rupees or more, and which have been completed not less than 1 year before undertaking the impact study. Thus with all non-profit data being reportable centrally, the path is being paved for a highly transparent and accountable social sector. Grant funds can now be tracked from point of origin to point of application and scale of impact. These are but, the stepping stones for the roll out of the social stock exchange. [1] Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), Department of Science and Technology (DST), Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs)

As the world is getting increasingly interconnected, it is witnessing its greatest – Cyber-Crimes! As Robert Muller, FBI Director puts it-“ There are only two types of companies: those that have been hacked and those that will be ”. In this issue we will deal with regulatory framework regarding cheating by personation, fraud and misrepresentation electronically. CYBER-CRIME & PHISHING In India, the term “Cyber-crime” is not defined in any statute or rules. In general parlance one can construct the term to mean offences relating to or using computers, internet and other electronic communications platforms such as WhatsApp, Twitter etc. Phishing can be defined as any proposition for jobs or personal information in return for money by way email, telephone or text message. These are acts of impersonation where a person poses as a member of a legitimate organization. NGOs AS VICTIMS OF CYBER-CRIME By someone falsely representing themselves to be the non-profit and receiving donations intended for the non-profit. The miscreant may use identities of the non-profit such as logos, trademarks, program names and even employee names to make the representation look very compelling. By someone falsely representing themselves to be the officers of the non-profit and inducing members of the public to make payments of processing/ registration/ application fees on the promise of grants or prizes, in return. They may seek confidential details from the public including bank details, passwords and send emails from email addresses very similar to that of key functionaries of the NGO. By inducing the non-profit to make payments of processing/ registration/ application fees on the false promises of securing grants from grant making agencies. The miscreant may use identities of the non-profit such as logos, trademarks, program names and even employee names to make the representation look very compelling. Such cyber-crimes cause the name of the NGO to be maligned. Since people are cheated, this may result in a financial liability on the NGO. STEPS NGOs CAN TAKE TO PREVENT CYBER-CRIMES Adding Disclaimer - Provide a disclaimer on the organisation’s official website/Facebook/LinkedIn or any other social media handles. The disclaimer should specifically draw attention to any possible phishing attacks and absolve the organisation from any liability arising from such an act. Providing an email address, phone number or a mailing address where any fraudulent activities can be reported to the organisation. Adding cookies to the organization’s website to track the activity of the page and take action against any suspicious users/ activities. While this is not infallible, this may act as a primary protection barrier. Official social media handles can be tracked, which may ensure a first-level tracking of the persons accessing the information provided by the organization. If it has no official page, the organization must have a person who continuously watches the various social media and is mandated with the task of reporting/removing phishing groups or posts on such groups. Not post any official documents containing sensitive information of the organisation. Check the network security if there is a chance that the person has secured phone number/ identity of applying entities by breaking into the organization portal and take measures to fix the glitches. In the event an incident of a cyber-impersonation comes to the notice of the organization, the NGO should do the following with immediate effect: Cyber-crimes constitute a crime under various Indian laws including the Indian Penal Code. Therefore the NGO must lodge a written complaint against the impersonator to the cyber cell ( https://cybercrime.gov.in ) or police station and attach documents which support the facts of the case fully. Given the fact that the identities of these miscreants are seldom available, the NGO can consider filing a civil suit seeking a ‘John Doe’ order before the jurisdictional City Civil Court. A ‘John Doe’ order is a relief sought by a Plaintiff wherein the perpetrators of the crime are not known. The enforcement of rights under such an order would be against any person(s), who conspire or commit the offence. Though it is not possible to prevent cyber-crimes from occurring, it is possible to safeguard an organisation and minimise the impact of such cyber-crimes. Do reach out to legal counsel to develop a tailored and holistic strategy against cyber-crimes.