MCA regulated companies to disclose CSR activities in Form CSR-2
The Central Government has recently announced amendments to the Companies (Accounts) Rules, 2014, called Companies (Accounts) Amendment Rules, 2022.
Introduced in Feb 2022, the rule requires all Companies regulated by MCA are notified to start furnishing a report on Corporate Social Responsibility (CSR) in Form CSR-2 to the Registrar for financial year 2020-21 and onwards.
This is to be submitted as an addendum to AOC-4 or AOC-4 XBRL or AOC-4 NBFC whichever is applicable to the company. You may read the full MCA notification about furnishing CSR related data to the registrar.
What is a CSR Report?
CSR reports are a way for an organization to communicate its mission, efforts, and outcomes to external and internal stakeholders. In addition to decision-makers, shareholders and employees, these include the local community, customers, and society at large. If they have been bold and successful in their CSR efforts, the release of such a significant report is as much a communication tool as it is a marketing and public relations event. Releasing a CSR report on an annual basis can also create accountability.
Who is this originally applicable to file CSR in Form CSR-2?
As per the Act, which came into effect from 1 April 2014, companies with:
- a net worth of INR500 crore or more, or
- a turnover of INR100 crore or more, or
- a net profit of INR5 crore or more,
during the immediately preceding financial year were required to spend 2% of their profits on CSR programs. Eligible companies had to form an exclusive CSR committee, formulate a CSR policy, and implement projects in alignment with the Act. CSR related disclosures had to be made in the annual report as per the format prescribed by the Act.
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.
Through this latest notification, MCA has introduced Form CSR-2. It is to be filed in addition to Form AOC-4 CFS for filing the company’s financial statement with the Registrar of Companies. Following this notification from MCA, the companies are now required to disclose the following information:
- 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.
Form CSR-2 Filing Deadline
For the financial year 2020-21, Form CSR-2 is to be filed separately on or before 31st March 2022. For 2021-22 onwards, CSR-2 shall be filed as an addendum to form Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be (adhering to due date of applicable form).