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Whether the provisions of CSR are applicable to section 8 companies?

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Whether the provisions of CSR are applicable to section 8 companies?
posted Aug 4, 2017 by Mukul Chag

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Since section 8 companies are supposed to apply their profits in promoting the objects such as commerce, art, science, sports, education etc.

There is no specific exemption given to section 8 companies with regard to applicability of section 135, hence section 8 companies are required to follow CSR provisions.

Corporate Social Responsibility is covered under section 135 of the Companies Act, 2013.

It categorically states that Every Company having –
(i) Net worth of rupees five hundred crore or more, or
(ii) Turnover of rupees one thousand crore or more, or
(iii) Net profit of rupees five crore or more

Whether the provisions of CSR are applicable to section 8 companies?
Whether the provisions of CSR are applicable to section 8 companies?

During any Financial year or more shall constitute a Corporate Social Responsibility Committee.
The Committee shall consist of three or more directors, out of which at least one director shall be an independent director.

According to Rule 3 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, Every company including its holding or subsidiary and a foreign company having its branch office or project office in India and if it fulfills the threshold limits specified above shall comply with the provisions of Sec 135 of the Companies Act, 2013.

Sec 135 applies to Private Companies and Unlisted Public Companies also. In case such companies fulfill the criteria mentioned in Sec 135 but is not required to appoint an independent director as stated in sub-section (4) of Sec 149, it shall constitute a CSR Committee without an independent director.

As regards Sec 8 companies, there is no specific exemption mentioned in the Act or in any circulars as regards their applicability to Sec 135 of the Act. Therefore, Sec 8 companies are also required to follow the CSR provisions if they meet any of the criteria mentioned in Sec 135 of the Companies Act, 2013

answer Aug 8, 2017 by Adarsh
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