In our newsletter with subject as Contribution/Donation/Corporate
Social Responsibility (CSR) Contribution by Subsidiary of Foreign Company is
treated as Foreign Contribution we had discussed about “Corporate Social Responsibility (CSR)”,
“Foreign Source”, “Foreign Contribution”
and the applicability of Foreign Contribution Regulation Act, 2010 to the
subsidiary of Foreign Company.
In furtherance to the same, the Government of India has
proposed an amendment in the Finance Bill of 2016
in the definition of Foreign Source namely:
“Provided that where
the nominal value of share capital is within the limits specified for foreign
investment under the Foreign Exchange Management Act, 1999, or the rules or
regulations made thereunder, then, notwithstanding the nominal value of share
capital of a company being more than one-half of such value at the time of
making the contribution, such company shall not be a foreign source”
If the proposed amendment is passed in the parliament, there will be relaxations for companies for whom CSR is mandatory and also various other entities that do not have FCRA Registration.
The Subsidiary of Foreign Companies which now have limited scope to expend or donate the amount under CSR only to entities that have FCRA Registration will be able to freely donate or expend the money without checking for FCRA Registrations.
Also the entities that accept donations or receive any aid from subsidiary of Foreign Companies are currently required to obtain prior registration under FCRA or prior permission from Central Government (Ministry of Home Affairs), which will be done away with.
The earlier newsletter can be viewed on the following link:
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