Lok Sabha Question No. 13 (STARRED), answered on 2023-12-04
Subject: CSR Disclosure Framework
Ministry: CORPORATE AFFAIRS
Asked by: Sanjay(Kaka) Ramchandra Patil, Chandra Sekhar Bellana

## GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS

LOK SABHA STARRED QUESTION NO. 13 ANSWERED ON MONDAY, DECEMBER 4, 2023/AGRAHAYANA 13, 1945 (SAKA)

## CSR DISCLOSURE FRAMEWORK

## QUESTION

*13.   SHRI SANJAY KAKA PATIL: SHRI CHANDRA SEKHAR BELLANA:

Will the Minister of CORPORATE AFFAIRS be pleased to state:

(a) whether the Government has introduced a detailed CSR disclosure framework in order to enhance transparency on the part of companies; (b) if so, the details thereof and the intended impact of the same; (c)  whether  the  Government  is  taking  measures  to  reduce  the  possible  addition  of compliance burden on the part of the corporates in this respect; and

- (d) if so, the details thereof and if not, the reasons therefor?

## ANSWER

THE MINISTER OF FINANCE AND CORPORATE AFFAIRS                                              (SHRIMATI NIRMALA SITHARAMAN)

(a) to (d): A Statement is laid on the Table of the House.

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STATEMENT REFERRED  TO  IN  REPLY  TO  PART  (a)  to  (d)  OF  LOK  SABHA  STARRED CSR

QUESTION  NO. 13  (13 th   POSITION)  FOR  04 th   DECEMBER ,  2023  REGARDING  ' DISCLOSURE FRAMEWORK '. (a)  &  (b):    The  broad  framework  for  Corporate  Social  Responsibility  (CSR)  has  been provided under Section 135 of the Companies Act, 2013 ('Act'), Schedule VII of the Act and Companies (CSR Policy) Rules, 2014. Under  the  Act,  CSR  is  a  Board  driven  process  and  the  Board  of  the  company  is empowered  to  plan,  decide,  execute  and  monitor  CSR  activities  based  on  the recommendations of its CSR Committee. The CSR framework is disclosure based and companies are required to file details of CSR activities annually in the MCA21 registry. The  CSR  mandated  companies  are  required  to  provide  information  in  their  Annual Financial Statement regarding the amount of expenditure incurred on CSR activities. The Ministry has also notified the Companies (Auditor's Report) Order, 2020, ('CARO, 2020') applicable  from  FY  2021-22  which  requires  auditors  to  state  details  of  any  unspent  CSR amount. The details of CSR activities, Impact Assessment etc. are required to be reported by all the companies in the 'Annual Report on CSR' including annual action plan on CSR which is part of the Company's Board Report. The Board's Report including Annual Report on  CSR  is  an  important  tool  of  communication  by  the  Board  of  a  company  to  its shareholders. Further, those companies who have their websites are required to make disclosures such as composition of CSR Committee, CSR Policy and CSR projects approved by Board on their website for public access and transparency. The Ministry vide notification dated 11 th   February, 2022 has introduced a web based Form CSR-2 which has to be filed by each CSR eligible company from financial year 2020-21 and onwards. In the said Form the companies are to indicate projects details being carried out by them.  Thus, the corporate  governance  framework  along  with  the  existing  legal  provisions  such  as mandatory disclosures, accountability of the CSR Committee and the Board, provisions for  statutory  audit of  accounts of the company, filing of forms etc. provide adequate scope to review the works done and enhance transparency on the part of Companies. (c) & (d):  The Government is continuously taking measures to reduce compliance burden on the part of the corporates. Section 135 of the Act was amended vide the Companies (Amendment) Act, 2019 and the Companies (Amendment) Act, 2020. These amendments provided for setting-off of excess CSR spent and the non-compliance of CSR provisions as a civil wrong w. e. f. 22nd January 2021. Further, Companies (CSR Policy) Rules, 2014 was  also  amended  which  have  strengthened  the  CSR  eco-system  by  bringing  more objectivity, transparency etc. In order to reduce the financial burden on companies, the amendments  also  allow  the  companies  to  spend  5%  of  their  CSR  expenditure  on administrative overheads and another 2% or fifty lakh rupees, whichever is higher for impact  assessment  of  their  CSR  projects.  Further,  to  ease  the  burden  of  CSR compliances on small companies, the companies having CSR obligation below Rs. 50 lakhs are exempted from constituting a CSR Committee.

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