"Harmony Foundation" is a newly incorporated company focused on promoting education and healthcare services in rural areas. The company is registered as a section 8 company with a clear plan to reinvest all profits into its activities, and a license has been accorded by the Central Government. For the financial year ending on 31st March, 2024, the company earned a substantial profit and transferred some amount to M/s LMP Associates (a Partnership firm and one of the member of the Harmony Foundation). Subsequently, on the complaint of one of the members, the Central Government, after giving an opportunity of being heard, directed the company to be wound up on the ground that a partnership firm cannot be a member of the section 8 company and it cannot transfer any part of profit to the firm. Explain, in the light of the provisions of the Companies Act, 2013, whether the ground taken for winding up is sufficient.

Formation of companies with charitable objects etc. (Section 8 company):\n• Section 8 of the Companies Act, 2013 deals with the formation of companies which are formed to \no promote the charitable objects of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment etc. \no Such company intends to apply its profit in \no promoting its objects and \no prohibiting the payment of any dividend to its members. \n• The Section 8 company operates under a special licence from Central Government and the Licence revoked if conditions contravened. \n• On revocation, Central Government may direct it to \no Converts its status and change its name \no Wind–up \no Amalgamate with another company having similar object. \n• A partnership firm can be a member of Section 8 company.\nIn the instant case, “Harmony Foundation” a section 8 company transferred some amount to M/S LMP Associates (a Partnership firm and one of the members of the Harmony Foundation). \nThe Central Government, after giving an opportunity of being heard, directed the company to be wound up on the ground that a partnership firm cannot be a member of the Section 8 company and it cannot transfer any part of profit to the firm.\nHence, the ground for winding up taken on the basis of transfer of any part of profit by Harmony Foundation to the M/S LMP Associates is correct and sufficient. \nHowever, M/S LMP Associates can become a member of Section 8 company. Therefore, this ground is not correct hence not sufficient.