CSR Compliance for Unlisted Indian Companies: A Practitioner Guide (2026)
- Marpu Foundation
- 3 days ago
- 12 min read
This article reflects observations on CSR compliance practice for unlisted Indian companies as of July 2026. The regulatory framework continues to evolve. This article is updated annually. Last updated: July 2026.
CSR compliance conversations in India tend to focus on listed companies. Regulatory attention, media coverage, sector benchmarks, and much of the practitioner discussion assume the audience is a listed company with BRSR disclosure obligations, LODR requirements, and public market scrutiny. This focus is understandable given the visibility of listed company CSR, but it leaves a specific audience under-served: unlisted Indian companies that meet the Section 135 thresholds and carry the same core CSR obligations.
Unlisted companies covered by Section 135 face the same statutory CSR requirements as listed companies, but they operate in a different context. There is no BRSR disclosure obligation. There is no LODR framework. Investor communication happens through different channels. Public and media scrutiny follow different patterns. And strategic considerations, particularly around potential future listing, private equity investor expectations, and long-term governance evolution, shape CSR practice in specific ways that listed-company-focused content does not fully address.
This article walks through CSR compliance specifically from the unlisted Indian company perspective: which unlisted companies are covered, what the core compliance obligations are (the same as listed), what is genuinely different for unlisted companies, five specific considerations that matter more in the unlisted context, what listed-company practices are worth adopting even without regulatory requirement, common mistakes, and suggestions for a strong unlisted-company CSR approach.
It is written for the CSR head of an unlisted Indian company, the CFO, the Company Secretary, the CSR Committee, and anyone thinking about CSR compliance in a company without public listing. The article is a practitioner-voice operational reference. It is not a substitute for the company's own CSR Committee, Company Secretary, Chartered Accountant, and Legal counsel review of specific compliance decisions.
Important note: This article provides operational guidance on CSR compliance for unlisted Indian companies based on observed practice as of July 2026. It is informational guidance and does not constitute legal, financial, or compliance advice. The CSR regulatory framework, including Section 135 of the Companies Act 2013 and the Companies (CSR Policy) Rules 2014, is subject to amendment by the Ministry of Corporate Affairs. Every compliance decision should be reviewed by the company's CSR Committee, Company Secretary, Chartered Accountant, and Legal counsel with reference to current provisions and the company's specific context. Verify against current MCA notifications and applicable statutory provisions before finalising the CSR approach.
Which Unlisted Companies Are Covered by Section 135
Section 135(1) of the Companies Act 2013 defines the trigger thresholds for CSR applicability. A company is covered by the CSR provisions during any financial year if it meets any one of the following in the immediately preceding financial year.
Net worth of ₹500 crore or more
Turnover of ₹1,000 crore or more
Net profit of ₹5 crore or more
These thresholds apply equally to listed and unlisted companies. A company that meets any one of these thresholds must comply with the full Section 135 framework, regardless of whether its shares are listed on a stock exchange.
Once triggered, a covered unlisted company must comply with all the Section 135 obligations. There is no reduced compliance path for unlisted companies. This is the point the article rests on: unlisted status does not reduce the CSR obligation.
What CSR Compliance Looks Like for Unlisted Companies (the Same Core Rules)
The core CSR compliance requirements are identical for listed and unlisted companies once the Section 135 thresholds are met. Both must comply with the following.
CSR spend obligation: At least 2% of the average net profits of the three immediately preceding financial years must be spent on CSR activities every financial year
CSR Committee: A committee of the Board consisting of three or more directors, at least one of whom is an independent director where the company is required to appoint an independent director
CSR Policy: A formal CSR Policy documented by the Board covering the company's approach, focus areas, and implementation approach
Schedule VII alignment: All CSR activities must fall within the areas specified in Schedule VII of the Companies Act 2013
CSR-1 registration for implementation agencies: Where the company implements CSR through registered charitable entities, those entities must hold current CSR-1 registration
Form CSR-2 filing: Annual filing of Form CSR-2 with the Ministry of Corporate Affairs disclosing CSR spend and activities
Board's Report disclosure: Section 134 of the Companies Act 2013 requires CSR disclosures in the Board's Report
Annual Action Plan: Rule 5(2) of the Companies (CSR Policy) Rules 2014 requires an Annual Action Plan for the year's CSR activities
Utilization Certificates: Documentation of CSR spend utilisation as part of the compliance framework
Impact Assessment: Rule 8(3) impact assessment applies where the specific thresholds are met, regardless of listed or unlisted status
Ongoing project provision: Rule 4(6) on ongoing projects applies equally to unlisted company CSR
Carry-forward and set-off: Rule 7 provisions on unspent CSR amounts apply equally
Understanding this baseline matters. Unlisted companies sometimes assume that the compliance load is lighter because there is no BRSR or LODR obligation. The Section 135 compliance load is identical. What is different lies elsewhere.
What Is Genuinely Different for Unlisted Companies
Five specific dimensions genuinely differ between listed and unlisted companies covered by Section 135. These are the areas where unlisted-company CSR practice diverges meaningfully from listed-company practice.
1. No BRSR Disclosure Obligation
Business Responsibility and Sustainability Reporting (BRSR) is a disclosure framework mandated by SEBI for the top listed companies by market capitalisation. BRSR requires detailed disclosure on nine principles including community development and inclusive growth (Principle 8). Unlisted companies are not covered by BRSR, which means the specific disclosure framework does not apply.
This is not necessarily an advantage. BRSR disclosure has helped listed companies develop more disciplined CSR narratives, more measurable outcomes, and stronger stakeholder communication. Unlisted companies without BRSR obligations sometimes miss the discipline that the framework enforces.
2. No LODR Framework Applicability
The SEBI Listing Obligations and Disclosure Requirements (LODR) apply to listed companies and shape the communication and disclosure environment they operate in. Unlisted companies are not subject to LODR, which means the specific disclosure timing, communication protocols, and stakeholder engagement requirements do not apply.
Unlisted companies communicate CSR outcomes through different channels, and this difference shapes the operational rhythm of CSR communication significantly.
3. Different Investor Communication Patterns
Listed companies communicate CSR to public market investors including retail shareholders, institutional investors, mutual funds, and pension funds. Unlisted companies communicate CSR to a different investor base including promoters, private equity investors, family shareholders, and where applicable, government or other strategic investors.
The differences shape what CSR communication looks like. Private equity investors, in particular, increasingly bring their own ESG frameworks (including their own CSR expectations) to their portfolio companies, which shapes unlisted CSR practice in specific ways.
4. Different Media and Public Scrutiny Patterns
Listed companies face media and public scrutiny driven by market analyst coverage, quarterly disclosures, and investor communication. Unlisted companies face different scrutiny patterns: less quarterly financial press coverage, less market analyst attention, but sometimes more focused sector or industry-specific scrutiny.
This affects what CSR communication needs to look like. Listed companies often invest heavily in reputational CSR communication for market audiences; unlisted companies calibrate communication differently for their specific stakeholder base.
5. Strategic Considerations Around Future Listing or Exit
Many unlisted companies are on trajectories toward eventual listing, private equity exit, strategic sale, or long-term family business governance evolution. These trajectories shape CSR strategy meaningfully. Companies planning IPO in the medium term often start adopting listed-company CSR practices ahead of listing to smooth the transition. Companies backed by private equity often align CSR practice with the sponsor's portfolio-wide ESG expectations.
Strategic context shapes CSR in ways that listed-company-focused content rarely addresses.
Five Considerations That Matter More for Unlisted Companies
Beyond the differences above, five specific considerations tend to matter more in the unlisted context than they do for listed companies.
1. CSR Governance Discipline Even Without BRSR Requirement
Listed companies build CSR governance discipline partly because BRSR and LODR require it. Unlisted companies without these external drivers can allow CSR governance to drift, particularly if the CSR Committee meets infrequently, if the CSR Policy is dated, or if documentation practice is casual. Building genuine governance discipline without the external driver requires deliberate internal commitment.
2. Adopting Listed-Company Documentation Practice
Documentation practice at listed companies tends to be more rigorous because of external audit and disclosure exposure. Unlisted companies benefit from adopting listed-company documentation standards for CSR spend, activity records, Utilization Certificates, and impact evidence. This discipline supports strong compliance under any scrutiny, including potential future scrutiny during an IPO process or a PE due diligence event.
3. Preparing CSR Practice for Eventual Listing
For unlisted companies with medium-term IPO plans, adopting listed-company CSR practices ahead of listing produces a smoother transition. This includes disclosure discipline that anticipates BRSR requirements, CSR narrative development that suits public communication, and governance patterns that match listed-company expectations.
4. Matching Private Equity Investor ESG Frameworks
PE-backed unlisted companies often work with sponsors that have portfolio-wide ESG frameworks. Matching CSR practice to these frameworks supports the broader ESG relationship with the sponsor, produces reporting material the sponsor can aggregate across the portfolio, and prepares the company for future PE exit through a strategic sale or IPO.
5. Corporate Governance Evolution in Family Businesses
For family-owned unlisted companies, CSR often intersects with broader corporate governance evolution: transition from founder-led to professional management, formalisation of Board governance, adoption of independent directors, and strengthening of internal controls. CSR governance discipline can be a leading practice within this broader evolution.
What Listed-Company Practices Are Worth Adopting Even Without Regulatory Requirement
Even without BRSR or LODR obligations, several listed-company CSR practices are worth adopting for unlisted companies. Each supports stronger CSR outcomes, better governance, and preparation for future strategic transitions.
1. Structured Impact Reporting Beyond Statutory Filing
Listed companies covered by BRSR produce structured impact reports beyond the minimum Board's Report requirements. Unlisted companies benefit from adopting similar reporting discipline, either as internal Board reporting or as external communication material.
2. Board-Level CSR Committee Discipline
Listed companies with strong CSR Committees meet regularly, review programme performance substantively, and treat CSR as a governance matter. Unlisted companies can build similar committee discipline even without external requirement.
3. Third-Party Impact Assessment Practice
Where Rule 8(3) impact assessment is required, listed companies typically conduct rigorous third-party assessments. Unlisted companies below the impact assessment threshold sometimes benefit from voluntary third-party assessment, particularly for larger programmes or programmes with strategic significance.
4. Stakeholder Communication Beyond Compliance
Listed companies communicate CSR to multiple stakeholder audiences beyond compliance filings. Unlisted companies benefit from thoughtful stakeholder communication tailored to their specific stakeholder base, whether promoters, PE investors, employees, communities, or broader industry.
5. Multi-Year Programme Design and Multi-Year Governance
Listed companies increasingly design CSR programmes with multi-year horizons and correspondingly extended governance rhythms. Unlisted companies benefit from adopting similar multi-year design and governance patterns, particularly for programmes with genuine long-term impact potential.
How Unlisted-Company CSR Compliance Connects to the Broader Governance Framework
CSR compliance for unlisted companies sits within the broader corporate governance framework. Several connections matter.
The Companies Act 2013 governance framework: CSR compliance operates within the broader company law framework including director duties, Board processes, and shareholder governance
Company Secretary's role: The Company Secretary typically anchors CSR compliance filings, Board's Report drafting, and MCA filings. This role is particularly important for unlisted companies without listed-company compliance infrastructure
Statutory audit: The statutory audit process includes CSR expenditure verification and reporting. Documentation discipline supports audit readiness
Internal audit function: Where the company has an internal audit function, CSR programme monitoring benefits from internal audit review
Related-party transaction framework: CSR arrangements with related parties require the standard related-party transaction disclosures
Tax framework: CSR spend has specific tax treatment under the Income Tax Act 1961 that requires professional consultation
FEMA implications: For unlisted companies with foreign shareholders or foreign parent companies, CSR arrangements may have FEMA implications that require review
Sectoral regulatory frameworks: Unlisted companies in regulated sectors (BFSI, telecom, healthcare, energy) may have additional sectoral requirements that intersect with CSR
Understanding these connections helps unlisted companies see CSR compliance as part of broader governance discipline rather than as an isolated obligation.
Five Common Mistakes Unlisted Companies Make in CSR Compliance
Across observed practice, five recurring patterns weaken CSR compliance in unlisted companies.
1. Assuming Reduced Compliance Load
The most common mistake is assuming unlisted status reduces CSR compliance obligations. The core Section 135 compliance requirements are identical for listed and unlisted companies. Unlisted companies must comply as fully as listed companies.
2. Under-Investing in CSR Governance Discipline
Without the external drivers of BRSR and LODR, unlisted companies sometimes allow CSR governance to drift. Committee meetings become infrequent, Policy documents go undated, and documentation practice becomes casual. Building governance discipline without external drivers requires deliberate internal commitment.
3. Treating CSR as Purely a Filing Exercise
Some unlisted companies treat CSR as a compliance filing exercise focused on spending the required amount, filing the Board's Report, and submitting Form CSR-2. This narrow framing produces weak programme design and limited actual outcomes, even when statutory compliance is achieved.
4. Missing Preparation for Future Strategic Transitions
Unlisted companies on trajectories toward IPO, PE exit, or strategic sale sometimes fail to prepare CSR practice for the transition. Building listed-company CSR practices ahead of listing, matching PE sponsor frameworks, or preparing for due diligence scrutiny all support smoother strategic transitions.
5. Late Compliance Response
Unlisted companies sometimes leave CSR compliance to the end of the financial year, resulting in rushed spend, weak programme design, and last-minute filing pressure. Building CSR into the year's operational rhythm from the start of the financial year supports stronger compliance and stronger outcomes.
Five Suggestions for a Strong Unlisted-Company CSR Approach
The following suggestions reflect practice that produces stronger unlisted-company CSR programmes. They are observations, not prescriptions.
1. Build CSR Governance Discipline Even Without External Requirement
Regular CSR Committee meetings, updated CSR Policy, substantive Board engagement, and documented decision-making support strong compliance and strong outcomes. Building this discipline early prevents drift and supports future strategic transitions.
2. Adopt Documentation Standards From Listed-Company Practice
Structured documentation of CSR spend, activity records, Utilization Certificates, impact evidence, and Board engagement supports compliance under any scrutiny. Adopting listed-company standards even without regulatory requirement prepares the company for future audit, IPO due diligence, or PE exit due diligence.
3. Design CSR With Multi-Year Horizons From the Start
Programmes designed with multi-year horizons produce stronger compounding outcomes than year-by-year programmes. Rule 4(6) on ongoing projects supports multi-year design structurally.
4. Prepare CSR Practice for Strategic Trajectory
Unlisted companies with clear strategic trajectories (planned IPO, PE exit, family business transition) benefit from preparing CSR practice for that trajectory in advance rather than adapting reactively.
5. Engage Professional Advisers Actively
Company Secretary, Chartered Accountant, and Legal counsel engagement in CSR compliance is not overhead. Their expertise supports strong compliance, catches emerging risks early, and supports broader governance discipline.
A Note on the Limits of This Article
This article provides operational guidance on CSR compliance for unlisted Indian companies based on observed practice as of July 2026. It is informational guidance and does not constitute legal, financial, or compliance advice.
The CSR regulatory framework, including Section 135 of the Companies Act 2013 and the Companies (CSR Policy) Rules 2014, is subject to amendment by the Ministry of Corporate Affairs. Statutory audit, tax treatment, related-party transactions, FEMA implications for companies with foreign shareholders, and sectoral regulatory requirements all intersect with CSR compliance.
Every compliance decision should be reviewed by the company's CSR Committee, Company Secretary, Chartered Accountant, and Legal counsel with reference to current provisions and the company's specific situation.
The considerations, practices, and suggestions in this article are starting references, not prescriptions, and should be adapted to the specific unlisted company context, sector, ownership structure, and strategic trajectory with professional consultation.
What This Article Is Actually Saying
Three things are worth holding onto.
1. The core CSR compliance obligations are identical for listed and unlisted Indian companies. Section 135 threshold triggers, 2% CSR spend requirement, CSR Committee, CSR Policy, Schedule VII alignment, Board's Report disclosure, Form CSR-2 filing, impact assessment where Rule 8(3) applies, and all core compliance elements are the same. Unlisted status does not reduce the compliance load.
2. What is genuinely different lies in disclosure framework applicability, investor communication, scrutiny patterns, and strategic considerations. BRSR and LODR do not apply to unlisted companies. Investor communication happens through different channels. Media and public scrutiny follow different patterns. And strategic considerations around future listing, PE exit, or family business governance evolution shape CSR practice in specific ways.
3. Unlisted companies benefit from adopting listed-company CSR practices even without regulatory requirement. Governance discipline, documentation standards, structured impact reporting, third-party assessment, and stakeholder communication all support stronger outcomes and prepare the company for future strategic transitions.
The unlisted Indian companies that build strong CSR practice tend to be those that build governance discipline without waiting for external drivers, adopt documentation standards from listed-company practice, design multi-year CSR from the start, prepare CSR for strategic trajectory, and engage professional advisers actively. The compounding effect across years, in terms of compliance strength and preparation for future strategic transitions, is meaningful.
Working With Marpu Foundation on Unlisted-Company CSR Programmes
At Marpu Foundation, we work with corporate CSR teams across listed and unlisted Indian companies. We currently work with 250+ corporate partners across 23+ Indian states, and our documentation infrastructure supports the CSR compliance requirements of both listed and unlisted partners.
For unlisted Indian company CSR teams designing or refining CSR programmes for FY 2026-27, the ways we support the work include the following:
Programme design input: Contributing to programme design across cause areas, geographies, and multi-year horizons appropriate to unlisted company CSR
Multi-state operational reach: Enabling programmes across our 23+ state footprint including rural districts, semi-urban areas, and urban geographies
Documentation discipline: Maintaining the activity-level, financial, and outcome documentation that supports statutory audit, Board's Report drafting, Form CSR-2 filing, and where applicable, PE due diligence or IPO preparation
Multi-year partnership orientation: Supporting CSR programmes designed as multi-year interventions where outcomes compound across sustained presence
Compliance-ready records: Maintaining CSR-1 registration, 12A registration, and 80G registration, with documentation practice that supports partners' full compliance requirements
We hold current CSR-1 registration, 12A registration, and 80G registration, and our documentation supports corporate partners' CSR compliance across the annual cycle.
For unlisted Indian company CSR teams designing or refining CSR programmes for the coming financial year, write to connect@marpu.org or visit marpu.org. Send a brief note on your CSR spend scope, target cause areas, target geographies, and strategic context, and we respond within two working days with programme design input, operational presence details, and a proposal aligned to your priorities.
For unlisted-company CSR teams building compliance practice with any implementation approach, the guidance above is the working reference. Build governance discipline without waiting for external drivers, adopt documentation standards from listed-company practice, design multi-year CSR from the start, prepare CSR for strategic trajectory, and engage professional advisers actively. The unlisted companies that build strong CSR practice are the ones that treat compliance as the foundation and outcomes as the purpose.
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