Creation/Acquisition of Capital Asset out of CSR funds
## Capital Asset Created out of CSR Spend
CSR funds may be spent for the creation or acquisition of a capital asset, but the asset cannot be held by the company itself. The capital asset so created/acquired shall be held by one of the following:
### Permitted Holders of CSR Capital Asset
1. A Section 8 Company / Registered Public Trust / Registered Society — which has a CSR Registration Number (i.e., has filed CSR-1).
2. Beneficiaries of the CSR project — in the form of self-help groups, collectives, entities (e.g., the asset is handed over to the beneficiary community/SHG).
3. A Public Authority — i.e., a government authority empowered to hold such assets for public welfare.
### Key Rule
The company funding the CSR project cannot itself own the capital asset created from CSR money.
If a capital asset was acquired/created out of CSR funds prior to 22 January 2021, the company has to comply with the new requirement within 180 days of the notification (extendable by 90 days with Board approval).
Worked example
### Example 1
Example 1: ABC Ltd builds a school building using CSR funds and registers ownership in the company's own name. Permissible? — No. The asset must be transferred to a Section 8 co / registered trust / society / public authority / beneficiaries.
### Example 2
Example 2: ABC Ltd buys ambulances out of CSR funds and donates them to a Self-Help Group running a rural health programme. Permissible? — Yes, beneficiaries (SHGs) can hold the capital asset.
### Example 3
Example 3: A water purifier installed at a village under CSR is handed over to the Gram Panchayat (a public authority). Permissible? — Yes, a public authority can hold a CSR capital asset.
⚠️ Common exam mistakes
Retaining ownership of CSR-funded capital assets in the company's books — this is non-compliant.
Transferring the asset to a Section 8 company / trust / society that has NOT obtained a CSR Registration Number — not permitted.
Forgetting that 'beneficiaries' as holders means organised collectives such as SHGs, not the company's CSR department.
Bare-Act text Rule 7(4) — Creation/Acquisition of Capital Asset · Companies (CSR Policy) Rules, 2014 · click to expand
The CSR amount may be spent by a company for creation or acquisition of a capital asset, which shall be held by — (a) a company established under section 8 of the Act, or a Registered Public Trust or Registered Society, having charitable objects and CSR Registration Number; or (b) beneficiaries of the said CSR project, in the form of self-help groups, collectives, entities; or (c) a public authority.