Under the Companies Act, 2013, the Corporate Social Responsibility (CSR) provisions under Section 135 are designed for companies that are profit-oriented and meet certain financial thresholds (net worth, turnover, or net profit). Section 8 companies, on the other hand, are established as not-for-profit entities with a primary objective of promoting social causes, art, science, research, or social welfare.

Key Points:

• Nature of Section 8 Companies:
  Section 8 companies are created to operate on a non-profit basis. Their main objective is to further social, charitable, or other public welfare causes, and they do not distribute profits to shareholders.

• CSR Applicability:
  The CSR provisions under Section 135 are applicable only to companies that meet certain financial thresholds (₹500 crores net worth, ₹1000 crores turnover, or ₹5 crores net profit) and are profit-making. Since Section 8 companies operate on a not-for-profit basis, they are not required to comply with CSR provisions.

• Reasoning:
  The intent behind CSR is to encourage profit-making companies to contribute to social welfare by setting aside a portion of their profits for CSR activities. Section 8 companies, being inherently non-profit, are already geared toward social causes and are thus exempt from these additional CSR obligations.

Conclusion:

CSR provisions under Section 135 of the Companies Act, 2013 do not apply to Section 8 companies because their primary focus is on social welfare and they operate on a not-for-profit basis.