Introduction
The Ministry of Corporate Affairs has introduced a new form for Corporate Social Responsibility (“CSR”) reporting, i.e. the CSR-2 form. The new form, CSR-2, was notified by the Ministry of Corporate Affairs on 11th February, 2022 vide the Companies (Accounts) Amendment Rules, 2022.
The details required to be reported through the 11 page form would present a comprehensive picture of the CSR activities as well as CSR spending by companies. It appears that the form has been introduced to assist the Government in monitoring the discharge of CSR obligations by companies, as well as to provide data to inform future policymaking in the CSR sphere.
Key Aspects
The new form CSR-2 and would require the reporting company to state, inter alia, details relating to the company’s CSR Committee, CSR spending, amount of CSR money unspent/carried forward, details of ongoing CSR projects and confirmation whether an impact assessment of CSR projects has been carried out.
The form would need to be furnished to the Registrar of Companies for the preceding financial year (i.e, 2020-2021) and onwards, as an addendum to existing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be. These forms are available in the Companies (Accounts) Rules, 2014.
The requirement to fill in and furnish the form would be applicable to all companies covered under Section 135(1) of the Companies Act, 2013. This includes every company having net worth of Rs. 500 Crore or more, or turnover of Rs. 1000 Crore or more, or a net profit of Rs. 5 Crore more during any financial year
Our Take
Given that certain details to be disclosed through the new form CSR-2, such as composition of the CSR Committee and spending on CSR are already required to be disclosed by companies as part of the main directors’ report, which forms a part of the annual report, the new form CSR-2 may cause a duplication of CSR reporting, therefore increasing compliance obligations on companies.
Links: Companies (Accounts) Amendment Rules, 2022 – https://egazette.nic.in/WriteReadData/2022/233371.pdf
Companies (Accounts) Rules, 2014 –https://www.mca.gov.in/Ministry/pdf/NCARules_Chapter9.pdf
Recognition
