The Ministry of Corporate Affairs (“MCA”) vide its notification No. G.S.R 107(E) dated February 11, 2022 has introduced Companies (Accounts) Amendment Rules, 2022 (“CA Rules”) thereby further amending the Companies (Accounts) Rules, 2014 to further strengthen the compliance norms for CSR reporting and promote transparency by introducing Form CSR-2 (“Form”).
The Form is a web based form wherein the companies are required to provide details with respect to the obligation under the Companies (Corporate Social Responsibility Policy) Rules, 2014 (“CSRRules”), such as, constitution of CSR committee, whether or not the company has disclosed on its website details about its CSR committee, impact assessment, details of amount spent in the preceding financial years, unspent amount of CSR, ongoing projects, transfer of unspent amount of CSR, creation of capital assets etc. are to be disclosed.
Eligibility: The obligation of filing the Form is on every company covered under Section 135(1) of the Companies Act, 2013 (“Act”) which includes companies incorporated under the Act having (i) net worth of INR 500 crore or more; (ii) turnover of INR 1000 crore or more; or (iii) a net profit of INR 5 crore or more in the immediately preceding financial year.
Filing Date: MCA has ensured that the Form is implemented by the companies at the earliest. It is due to this reason companies [covered under Section 135(1)] are required to file the Form for the financial year 2020-2021 on or before March 31, 2022.
For the financial year 2021-2022 and onwards, the Form is required to be filed as an addendum to Form AOC-4 (Form for filing financial statement and other documents with the Registrar), AOC-4 XBRL (Form for filing XBRL document in respect of financial statement and other documents with the Registrar) or AOC-4 NBFC (Form for filing financial statement and other documents with the Registrar for NBFCs).
Prior to this notification, reporting of CSR was mandated only under the directors’ report, however, now, introduction of this Form ensures that all compliances (especially as set out in the CSR Rules) are undertaken and reported by the companies in the annual report as well as the Form for effective tracking by MCA.
While the notification has been released by the MCA on February 11, 2022, the Form is not yet available on MCA’s website. The draft of the Form and the Notification may be accessed here.
Alpha Rajan Comment
It is expected that this Form will act as an effective tool for MCA to identify the irregularities or misuse of CSR norms. It will also ensure that the CSR funds are spent in virtuous manner and the unspent CSR funds are not diverted for unintended purposes. It will further expand the data accessible to MCA which could be used for future CSR related policymaking.