Clarification with regard to Provisions under Section 135(5) of the Companies Act, 2013

Concerns have been raised by some stakeholders regarding non-compliance of the first proviso to Section 135(5) of the Companies Act, 2013, which lays down that the company shall give preference to the local area and areas around it where it operates for spending the amount earmarked for Corporate Social Responsibility activities.

Therefore, the Ministry of Corporate Affairs (MCA) vide General Circular No. 06/2018, has reiterated that the above provision has to be followed in letter and spirit.

[General Circular No. 06/2018]