Govt looks to ease compliance burden with new CSR disclosure rules

Source: The post is based on the article “Govt looks to ease compliance burden with new CSR disclosure rules” published in the Business Standard on 8^th October 2022.

What is the News?

The Ministry of Corporate Affairs has recently issued Companies (Accounts) Amendment Rules, 2022. This Companies (Corporate Social Responsibility(CSR) Policy) Amendment Rules did away with a few important rules.

About the recent Companies (Accounts) Amendment Rules, 2022

Earlier, companies have to provide details of their corporate social responsibility projects, such as activity, area, project duration, and mode of implementation, on the MCA21 portal in a form called CSR-2. The form provided a format in which companies had to report their CSR activities in the annual report. But, now the form has been

From now on, the annual report does not require CSR activity details, except the amount spent. If a company has created a capital asset, the form specifies that information like address, location, and pin code has to be mentioned.

What are the other provisions of the Companies (Accounts) Amendment Rules, 2022?

The rules have introduced the e-form CSR-2. The form mandates the disclosure of company information, the composition of the CSR committee, ongoing projects, and the transfer of CSR funds that have not yet been used.

The new rules have also revised the amount to be spent on impact assessment of CSR projects to 2% of total CSR obligation or Rs 5 million, whichever is higher. This expenditure on impact study will be part of the CSR obligation.

What is the need for Companies (Accounts) Amendment Rules, 2022?

According to industry representatives, the CSR-2 form was increasing the compliance burden as they were already providing this information on the MCA21 portal. So, the amendment will reduce the compliance burden on companies and avoid duplication.

What are the implications of the Companies (Accounts) Amendment Rules, 2022?

a) Stakeholders may lose their ability to keep track of companies’ CSR activities, b) The move has taken away the transparency on companies’ CSR spending.

How MCA is planning to improve CSR activities and accountability?

The MCA is planning to make the details of the CSR activities of companies available on the CSR portal from 2023 onwards. These details will be open to the public, and they would be able to see details of CSR projects company-wise.