Checklist for due diligence of Society

[Rohit Raghav]

Hello team/ seniors,

Please any one provide me checklist for Due diligence of Society.

Thankyou 

Cs management trainees 

Rohit Raghav 

[Arun Kumar Maitra]

The due diligence of a society (like a registered NGO, cooperative housing, or non-profit trust) involves rigorously vetting its legal status, financial health, and operational governance. This ensures regulatory compliance and verifies that the society’s mission aligns with your goals or those of your institution.

Conducting thorough due diligence on a society involves the following key components:

1. Legal and Regulatory Verification

• Registration Status: Verify that the society is officially registered under the relevant authorities (e.g., the Registrar of Societies in India under the Societies Registration Act, 1860).
• Bylaws and MoA: Obtain and review the Memorandum of Association (MoA) and Rules & Regulations/Bylaws to understand their objectives, voting rights, and governing rules.
• Statutory Compliance: Check for valid statutory registrations, including PAN, TAN, GST (if applicable), and tax exemptions under Section 12A/80G (for non-profits).
• Litigation Search: Check for pending court cases, disputes, or legal notices against the society or its office bearers.

2. Financial Due Diligence

• Financial Statements: Review the last 3 to 5 years of audited balance sheets, income and expenditure statements, and cash flow reports.
• FCRA Compliance (If applicable): If the society receives foreign contributions, confirm that they have a valid Foreign Contribution (Regulation) Act (FCRA) registration and have filed mandatory annual returns
• IT Returns: Ensure that annual Income Tax Returns (ITR) have been filed consistently and that there are no pending tax demands or penalties.
• 3. Operational and Governance Review

• Governing Body: Review the list of current managing committee members or trustees. Ensure there are no conflicts of interest and that elections are held as per their bylaws.
• Meeting Minutes: Request access to the minutes of past General Body and Managing Committee meetings to understand how decisions are made and if there are any historical disputes.
• Track Record: Look at previous projects, annual reports, and feedback from past donors or partnering organizations.

 

CA CS Arun Kumar Maitra

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