1. Legal Recognition under the Companies Act

• To be eligible for receiving Corporate Social Responsibility (CSR) funds, a Section 8 company must be registered under Section 8 of the Companies Act, 2013.
  
• It must have a clearly stated objective in its Memorandum of Association that aligns with CSR activities listed under Schedule VII of the Act.
  
• The company must carry out activities in sectors such as education, health, gender equality, rural development, and environmental sustainability.
  
• Its purpose must remain non-profit and public-serving.
  
• Profit-making motives or commercial activities disqualify the entity from CSR eligibility.
  

2. Mandatory CSR-1 Registration

• A Section 8 company must file Form CSR-1 with the Ministry of Corporate Affairs (MCA) to be eligible to receive CSR funding.
  
• This form must be digitally signed by a practicing professional (CA/CS/CMA) and by an authorized signatory of the company.
  
• Upon successful verification, the MCA issues a Unique CSR Registration Number.
  
• CSR-1 registration is mandatory from April 1, 2021, for all implementing agencies.
  
• Companies not registered under CSR-1 are not eligible to receive CSR funds.
  

3. Track Record and Experience

• For CSR implementation, a Section 8 company must have at least three years of track record in similar activities.
  
• The donor company may require documentation of past projects, audited financials, and impact reports.
  
• A strong operational history enhances credibility and increases chances of selection.
  
• This condition is especially applicable to companies acting as independent implementing agencies.
  
• If the Section 8 company is established by the funding corporation, this requirement may be relaxed.
  

4. Alignment with CSR Policy of Donor Company

• The Section 8 company must ensure its proposed projects align with the CSR policy of the contributing company.
  
• Only activities covered under Schedule VII of the Companies Act, 2013, are eligible for CSR funding.
  
• The projects must be within India and have a social impact objective.
  
• Administrative overheads must be limited to 5% of the total CSR expenditure.
  
• Deliverables, timelines, and fund utilization plans must be clearly outlined.
  

5. Compliance, Reporting, and Fund Utilization

• Once CSR funds are received, the Section 8 company must ensure proper utilization and reporting.
  
• It must maintain separate books of accounts for CSR activities and provide utilization certificates to the donor company.
  
• All projects and expenditures must be audited and documented.
  
• Reports must be submitted in formats acceptable under CSR rules and company audit norms.
  
• Misuse or misreporting may result in disqualification and regulatory action.