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CS Professional · CSR and Social Governance · Financial and Non-financial Reporting of Different Non-Corporate Entities

Gram Seva Mandal is a body of ten persons who came together to run a free library. It is registered under a state Societies Registration Act and has a memorandum and rules. It has no share capital and distributes no surplus to members. Which classification best describes it for the purpose of social governance?

It is a non-corporate entity in the form of a society. It is registered under a societies law, has no share capital, and distributes no surplus to members. It is not incorporated under the Companies Act, and it has no profit-sharing motive that would make it a partnership.

  1. AA non-corporate entity in the form of a societyCorrect
  2. BA company limited by guarantee under the Companies Act, 2013
  3. CA partnership firm carrying on business for profit
  4. DA body corporate formed by shareholders

Explanation

The body is registered under a Societies Registration Act, has no share capital and distributes no surplus. That makes it a society, which is a non-corporate entity. A company limited by guarantee would need incorporation under the Companies Act, and a partnership firm requires a profit motive.

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