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Question 5 (a) Quick Money Limited attracts the provisions of section 135 of the Companies Act, 2013 and it has minimum average obligation to spend Corporate Social Responsibility (CSR) amount of ` 15 crore during each of the preceding five years. In this connection, the Board of Directors of the company needs your expert views on the following matters: (i) What is the meaning of "impact assessment"? (ii) Whether impact assessment is required to be taken by all the companies? (iii) Who can conduct impact assessment? (b) State the circumstances under which the winding up of an LLP may be ordered by the Tribunal. (c) Define the term 'person' as per the General Clauses Act, 1897. Discuss which of the following will be treated as a person: (i) An idol (ii) A public body (iii) A company

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Detailed Solution & Explanation

(a) **Rule 8(3)** of the Companies (Corporate Social Responsibilities Policy), 2014 provides the class of companies that are required conduct an impact assessment. Every company having average CSR obligation of ten crore rupees or more in pursuance of section 135(5) of the Companies Act, 2013, in the three immediately preceding financial years, shall undertake impact assessment, through an independent agency, of their CSR projects having outlays of one crore rupees or more, and which have been completed not less than one year before undertaking the impact study. The above-mentioned companies may undertake impact assessment, through an independent agency. Alternate Answer (i) Meaning of Impact Assessment: The impact assessment is an exercise to assess the social, economic and environmental impact of a particular CSR project. Impact assessment intends to evaluate “social, economic and environmental return on investment”. It is the exercise of taking a retroactive view of the Corporate Social Responsibility (CSR) activities completed by the entity and assess the effects of these activities on various stakeholders like employees, customers, communities and the environment. Impact assessment is seemingly another step to encourage companies to make considered decisions before deploying CSR amounts and assess the impacts of their investments to capture the impact being generated by them. This shall not only serve as feedback for companies to plan and better allocate resources, but shall also deepen the impact of CSR. (ii) Whether the impact assessment is to be taken by all Companies? Since impact assessment is cost-intensive and time consuming, the idea is to obligate only certain classes of companies which have large amount of spending and have completed their large CSR projects. Accordingly, **Rule 8(3)** of the Companies (Corporate Social Responsibilities Policy), 2014 requires the following class of companies to conduct an impact assessment: Every company having average CSR obligation of ₹10\displaystyle \text{₹}10 crore or more in the three immediately preceding financial years of their CSR projects having outlays of 1 crore rupees or more, and which have been completed not less than 1 year before undertaking impact assessment. (iii) Who can conduct an impact assessment? The impact assessment shall be conducted by an independent agency. (b) Circumstances in which Limited Liability Partnership may be wound up by Tribunal (**Section 64** of the Limited Liability Partnership Act, 2008): A limited liability partnership may be wound up by the Tribunal: (a) if the limited liability partnership decides that limited liability partnership be wound up by the Tribunal; CORPORATE AND OTHER LAWS (b) if, for a period of more than six months, the number of partners of the limited liability partnership is reduced below two; (c) if the limited liability partnership is unable to pay its debts; (d) if the limited liability partnership has acted against the interests of the sovereignty and integrity of India, the security of the State or public order; (e) if the limited liability partnership has made a default in filing with the Registrar the Statement of Account and Solvency or annual return for any five consecutive financial years; or (f) if the Tribunal is of the opinion that it is just and equitable that the limited liability partnership be wound up. (c) Definition of the term “Person” As per section 3(42) of the General Clauses Act, 1897, “Person” shall include: - any company, or - an association, or - body of individuals, whether incorporated or not. From the above definition, we can conclude: (i) An Idol: An idol is a juristic person. A juristic person is a legal entity with a legal personality that is recognized by law. Hence, an idol is a person. (ii) A Public Body: A public body to be a person need not always be set- up by the statute. It may be set-up by the Government by exercising its executive function. A public body is a legal entity and is treated as a "person." (iii) A Company: The definition of person includes a company. Thus, a company is a person.

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