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CS Professional · CSR and Social Governance · Contribution of Non-Corporate Entities in Social Governance

Lakshmi Foundation, a company registered under section 8 of the Companies Act, 2013, works with Shanti Mahila Mandal, an unincorporated women's self-help association, on a skills project. Which classification is correct for the two entities?

The Foundation is a corporate entity because it is incorporated as a section 8 company, while the unincorporated Mandal is a non-corporate entity. Classification depends on incorporation, not on whether the entity is non-profit or has social objectives.

  1. ABoth are non-corporate entities because both are non-profit
  2. BThe Foundation is a corporate entity; the Mandal, being unincorporated, is a non-corporate entityCorrect
  3. CThe Foundation is non-corporate because it has no profit motive; the Mandal is corporate
  4. DBoth are corporate entities because both serve social objectives

Explanation

The test is incorporation, not profit motive. A section 8 company is incorporated under the Companies Act and so is a corporate entity despite its non-profit aim. The unincorporated association is non-corporate. Treating non-profit status as decisive is the key error in the other options.

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