CSR and Social Governance · CSR Projects and Implementation Agency

Implementation of CSR Policy Through Agencies

Updated 11 October 2026 · Fact-checked

A company can carry out CSR itself or through an implementing agency. The agency can be a Section 8 company, registered public trust or registered society set up by the company or by the Central or State Government. It can also be a statutory body, or an outside non-profit with a three-year track record. Agencies must be registered with the Registrar in Form CSR-1.

Understand Implementation of CSR Policy Through Agencies

Section 135 of the Companies Act, 2013 requires qualifying companies to spend on CSR. The law does not force a company to run projects with its own staff. The CSR Rules let the Board choose a mode of implementation, and the Board must say which mode it has chosen for each project.

There are two broad modes. In the first, the company acts directly, using its own people and resources. In the second, it works through an implementing agency. The CSR Rules list the agencies that qualify. They fall into four groups:

A Section 8 company, registered public trust or registered society established by the company itself, alone or together with other companies.
A Section 8 company, registered trust or registered society established by the Central Government or a State Government.
Any entity established under an Act of Parliament or a State legislature.
An independent Section 8 company, registered public trust or registered society that holds income-tax exemption and donation-approval registration and has an established track record of at least three years in similar activities.

The first group lets a company build its own foundation. The last group is the one students forget: an outside NGO is eligible only if it has that registration and a three-year record. A company may also collaborate with other companies on a project, provided each company can report its own share separately.

Section 8 of the Companies Act explains why a Section 8 company suits CSR. It must have charitable-type objects such as education, social welfare, charity or protection of environment. It must apply its profits only to those objects, and it must not pay dividends. The Central Government grants a licence, and the company may drop "Limited" or "Private Limited" from its name. It enjoys the privileges and obligations of limited companies. It cannot alter its memorandum or articles without the Central Government's previous approval.

Choosing an agency does not end the company's duty. The Board must still satisfy itself about the agency's credentials, monitor utilisation, and disclose the agency's details in the CSR reporting. Agencies must also register with the Registrar by filing Form CSR-1 and obtain a CSR registration number.

Key rules to remember

Modes of implementation: Direct by company OR through an eligible implementing agency; The Board must specify the mode for every project in the CSR policy and annual action plan.
Eligible agency types: Section 8 company / registered public trust / registered society; Eligible if set up by the company, or by the Central or State Government, or if independent with registration and track record.
Statutory bodies: Entity established under an Act of Parliament or State legislature; Qualifies as an agency by its statutory origin. The track-record test does not apply to it.
Independent agency test: Income-tax exemption and donation-approval registration + track record ≥ 3 years in similar activities; Applies only to agencies not set up by the company or the government. Both conditions must be met.
Registration: Agency files Form CSR-1 with the Registrar and gets a CSR registration number; The company should check this number before releasing funds.
Section 8 company conditions: Charitable-type objects + profits applied to objects + no dividend + Central Government licence; These come from section 8(1) of the Companies Act, 2013.
Section 8 default penalty: Company: fine ₹10,00,000 to ₹1,00,00,000. Officer in default: fine ₹25,000 to ₹25,00,000; Section 8(11). Fraud makes officers liable under section 447.

How to solve Implementation of CSR Policy Through Agencies questions

Use this order for any question on implementation through agencies. It keeps the provision, facts and conclusion separate.

1Identify the mode: is the company acting directly or through an agency?
2If an agency is used, classify its legal form: Section 8 company, registered public trust, registered society or statutory body.
3Ask who established it: the company (alone or with others), the Central or State Government, an Act of Parliament or State legislature, or nobody connected (independent).
4For an independent agency, test both conditions: income-tax exemption and donation-approval registration, and a track record of at least three years in similar activities.
5Check Form CSR-1 registration and the CSR registration number.
6Check the Board's duties: the mode is stated in the policy and annual action plan, utilisation is monitored, and the agency's details are reported.
7Write the conclusion clearly: eligible or not, and what the company should do next.

Quickest way: Four-question agency test

When to use it: Use when a case question gives a short fact pattern and asks if an agency is eligible.

Q1: Is it a Section 8 company, registered public trust or registered society, or a statutory body? If not, it is not eligible.
Q2: Was it set up by the company or by the Central or State Government, or by statute? If yes, it is eligible subject to registration.
Q3: If independent, does it have both income-tax registrations and three years of track record? If either is missing, it is not eligible.
Q4: Does it have a CSR-1 registration number? If not, tell the company to ensure registration before funding.

Common mistakes in Implementation of CSR Policy Through Agencies

Treating any registered NGO as an eligible agency.
Students remember the list of legal forms but forget the extra tests for independent bodies.
Fix: For an agency not set up by the company or the government, always check the income-tax registrations and the three-year track record.
Applying the three-year track record to every agency.
The condition is learned as a general rule rather than tied to independent agencies.
Fix: State that the track-record test applies to independent agencies. A body set up by the company or the government is judged on its establishment and registration.
Saying the company's liability ends once funds go to the agency.
Students think outsourcing transfers responsibility.
Fix: Write that the Board must still monitor utilisation, ensure proper use of funds, and disclose the agency details in CSR reporting.
Forgetting Form CSR-1.
Registration is seen as an agency matter and not a company check.
Fix: Mention that the agency must file Form CSR-1 and the company should verify the CSR registration number before release of funds.
Mixing up Section 8 rules with ordinary company rules, such as saying a Section 8 company may pay dividends.
Section 8(2) says it has all privileges of limited companies, so students generalise.
Fix: Remember that section 8(1) prohibits dividend payment to members and requires profits to be applied only to its objects. Its memorandum and articles cannot be altered without previous Central Government approval.
Writing that a company can only use an agency it has itself set up.
Students stop reading the list after the first category.
Fix: Cover all four groups: own, government-set-up, statutory and independent, and note that companies may collaborate with each other.

Worked examples

Example 1

Mehra Textiles Ltd is a company covered by section 135. Its Board wants to route its education CSR project through Vidya Seva Trust, a registered public charitable trust formed 14 months ago by a local group of teachers. The trust has income-tax exemption and donation-approval registration but no connection with the company. Is the trust eligible?

Show the solution

Provision: a company may implement CSR through a registered public trust. If the trust is independent, it needs income-tax exemption and donation-approval registration and a track record of at least three years in similar activities.
Facts: the trust is a registered public trust. It has both income-tax registrations. It was not set up by the company, the government or a statute. It is only 14 months old.
Analysis: the legal form and the registrations are satisfied. The track record is 14 months, which is less than three years.
Conclusion: the trust does not qualify as an independent implementing agency at present.

Answer: Vidya Seva Trust is not eligible, because its track record is under three years. Mehra Textiles can implement the project directly, or through a Section 8 company, trust or society it sets up itself, or through an eligible agency such as a statutory body or a qualifying independent NGO. It may revisit the trust once the trust completes three years and still holds the registrations. The agency must also hold a CSR-1 registration number.

Example 2

Bharat Steel Ltd and Kaveri Power Ltd, both CSR-covered companies, want to jointly set up a Section 8 company, Gramin Vikas Foundation, to run rural health projects. Advise on whether this works, and the conditions.

Show the solution

Provision: a Section 8 company set up by a company, alone or along with other companies, is an eligible implementing agency.
Section 8(1): the Central Government must be satisfied that the objects are charitable-type objects such as social welfare or education. The profits must be applied only to those objects. No dividend can be paid. The Central Government grants a licence, and the name may omit the word Limited or Private Limited.
Facts: the foundation is set up jointly by two companies for rural health, which falls within social welfare and charity.
Compliance points: the foundation must hold the licence and file Form CSR-1 for a CSR registration number. It cannot alter its memorandum or articles without previous Central Government approval. Each company must report its own contribution separately and monitor use of its funds.
Penalty point: default of section 8 requirements attracts fine of ₹10,00,000 to ₹1,00,00,000 on the company and ₹25,000 to ₹25,00,000 on officers in default.

Answer: Yes. A jointly established Section 8 company is an eligible implementing agency. The foundation must obtain a licence under section 8, apply profits only to its objects, pay no dividends, file Form CSR-1 and get Central Government approval before altering its memorandum or articles. Each company's Board must still monitor its funds and report its contribution separately.

Exam tips

Answer in the order provision, facts, analysis, conclusion. Examiners reward the test being applied to the facts.
List all four agency groups when the question asks "how can a company implement CSR". Missing the statutory and independent groups is a common loss of marks.
When the case gives an NGO's age, check the three-year track record first and say so.
Quote section 8(1) conditions precisely for Section 8 company questions: objects, application of profits, no dividend, licence. Give penalty figures only when asked.
Close with a practical point: Form CSR-1, Board monitoring and disclosure of the agency details in the CSR report.

Practice questions from CSR Projects and Implementation Agency

Implementation of CSR Policy Through Agencies in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA FinalCSR Implementation, Impact Assessment and Reporting

Implementation of CSR Policy Through Agencies: frequently asked questions

Who can be a CSR implementing agency under the Companies Act framework?

A Section 8 company, registered public trust or registered society can be an agency if it is set up by the company, or by the Central or State Government. An entity established under an Act of Parliament or a State legislature also qualifies. An independent body qualifies if it has income-tax exemption and donation-approval registration and a three-year track record in similar activities.

Can a company do CSR without an implementing agency?

Yes. A company may carry out CSR activities directly. The Board must specify the mode of implementation for each project in the CSR policy and annual action plan. Many companies use a mix of direct and agency routes.

Is Form CSR-1 required for every agency?

Implementing agencies that undertake CSR on behalf of companies must register with the Registrar by filing Form CSR-1 electronically. They receive a CSR registration number. The company should verify that number before releasing funds.

Why is a Section 8 company popular for CSR?

Section 8 requires charitable-type objects, application of profits only to those objects and no dividend to members. This matches the purpose of CSR. The company enjoys the privileges of a limited company, but it needs a Central Government licence and approval for changes to its memorandum or articles.

Does the company remain responsible after giving funds to an agency?

Yes. The Board must ensure the funds are used for the approved project and monitor implementation. The agency details must be disclosed in the company's CSR reporting.