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MCA Clarification on provisions of Section 135(5) of Companies Act 2013

Ministry of Corporate Affairs (MCA), vide General Circular No. 06/2018 dated 28th May 2018, has issued clarification with regard to provisions under section 135(5) of the Companies Act, 2013, as follows:—

Concerns have been raised by some stakeholders regarding non-compliance of the first proviso to sub-section (5) of section 135 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. It is reiterated that the above provision has to be followed in letter and spirit.

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