What are the significant points of Section 8 Company which are not applicable for other companies? Briefly explain with reference to provisions of the Companies Act, 2013.
OR
What do you mean by "Companies with charitable purpose" (section 8) under the Companies Act, 2013? Mention the conditions of the issue and revocation of the licence of such company by the government.
OR
Can a non-profit organization be registered as a company under the Companies Act, 2013? If so, what procedure does it have to adopt?

Question

Accepted Answer

Section 8 Company- Significant points
➢ Formed for the promotion of commerce, art, science, religion, charity, protection of the environment, sports, etc.
➢ Requirement of minimum share capital does not apply.
➢ Uses its profits for the promotion of the objective for which formed.
➢ Does not declare dividend to members.
➢ Operates under a special licence from the Central Government.
➢ Need not use the word Ltd./ Pvt. Ltd. in its name and adopt a more suitable name such as club, chambers of commerce etc.
➢ Licence revoked if conditions contravened.
➢ On revocation, the Central Government may direct it to
- Converts its status and change its name
- Wind – up
- Amalgamate with another company having similar object.
➢ Can call its general meeting by giving a clear 14 days notice instead of 21 days.
➢ Requirement of minimum number of directors, independent directors etc. does not apply.
➢ Need not constitute Nomination and Remuneration Committee and Shareholders Relationship Committee.
➢ A partnership firm can be a member of Section 8 company.
OR
Formation of companies with charitable purpose etc. (Section 8 company):
Section 8 of the Companies Act, 2013 deals with the formation of companies which are formed to
➢ promote the charitable objects of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment etc.
➢ Such company intends to apply its profit in
- promoting its objects and
- prohibiting the payment of any dividend to its members
Power of Central government to issue the license–
i) Section 8 allows the Central Government to register such person or association of persons as a company with limited liability without the addition of words ‘Limited’ or ‘Private limited’ to its name, by issuing licence on such conditions as it deems fit.
ii) The registrar shall on application register such person or association of persons as a company under this section.
iii) On registration the company shall enjoy same privileges and obligations as of a limited company.
Revocation of license: The Central Government may by order revoke the licence of the company where the company contravenes any of the requirements or the conditions of this sections subject to which a licence is issued or where the affairs of the company are conducted fraudulently, or violative of the objects of the company or prejudicial to public interest, and on revocation the Registrar shall put ‘Limited’ or ‘Private Limited’ against the company’s name in the register.

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1. Provisions of the Act / Applicable Law

2. Analysis & Application of Facts

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