The government had mandated that Corporate India publish a comprehensive report on their specific CSR initiatives. With the new 11-page form notified by the MCA on February 11, 2022, companies will have to provide the details of the CSR amount spent in the three preceding financial years and details of all ongoing projects.
This additional information can be used by the corporate affairs ministry in drafting effective policies for CSR. Companies will have to file the new Form CSR-2 for the preceding financial year (2020-21), on or before March 31, 2022. This is in addition to the Form AOC-4 for filing the company’s financial statement with the Registrar of Companies. These disclosures are also part of the annual report on CSR the MCA had mandated companies to file. This form will have to be submitted to the Registrar of Companies for the preceding financial year (2020-21) and onwards, the Ministry of Corporate Affairs (MCA) has said.
Earlier there was no form prescribed to furnish a report on CSR. Section 135 of the act only mandates to annex the details of CSR to its Board Report and also disclose on the website of the Company, if any. Now through this notification ministry introduced the Form CSR-2. The form is to be filed in addition to Form AOC-4 for filing the company’s financial statement with the Registrar of Companies.
What does Form CSR-2 require?
Form CSR-2, amongst other things, requires certain companies to report on matters such as the constitution of its CSR committee, its meetings, whether or not the company has disclosed on its website details about its CSR committee, CSR policy, and approved CSR projects. Also, the company is required to confirm whether an impact assessment of CSR projects has been carried out in pursuance of the Companies (CSR Policy) Rules, 2014. Under the report, the company is also required to submit detailed information around its investment in CSR Projects and the quantum of funds that has remained unspent.
Companies will have to provide the following in Form CSR-2:
– The details of the CSR amount spent in the three preceding financial years and details of all ongoing projects.
– Details of CSR Committee
– Details of CSR disclosed on the website of the company in pursuance of Rule 9 of Companies (CSR Policy) Rules, 2014
– Net Profit & other details of the company for the preceding financial years
– If any capital assets have been created or acquired through CSR spending, companies will have to provide details, including the address, location, pin code of the property, along with the amount spent and its registered owner.
Will it be effective?
The rolling out of form CSR-2 is a substantial step in this direction and the prime intent of lawmakers appears to be that of generating an extensive database of CSR activities being carried out by companies in India, identify the sources and NGOs receiving funds and penalize those who are abusing CSR provisions. Hence, the form CSR-2 would be an effective tool for helping the authorities to integrate, analyze and investigate data on CSR.