What is SECTION 8 COMPANY act 2013 - tradecareer

                              SECTION 8 COMPANY act, 2013

An association which is registered u/s 8 of the Companies Act, 2013 is known as 

Association not for Profit.

Section 8 of the Companies Act, 2013 reads as under: 

Section 8(1): If Central Government is satisfied that a person or an association of 

persons proposed to be registered under this Act as a limited company —

a) has in its objects the promotion of commerce, art, science, sports, education, 

research, social welfare, religion, charity, protection of environment or any such 

other object; 

b) intends to apply its profits, if any, or other income in promoting its objects; and 

c) intends to prohibit the payment of any dividend to its members, 

Then

The CG may, by licence issued in prescribed manner, and on such conditions as it 

deems fit, allow that person or association of persons to be registered as a limited 

company under this section without the addition to its name of the word "Limited", 

or "Private Limited" , and thereupon the ROC shall, on application, register such 

person or association of persons as a company under this section.

                                                                  

Section 8(2) The company registered under this section shall enjoy all the privileges 

and be subject to all the obligations of limited companies. 

Section 8(3) A firm can become a member of the company registered under this 

section. 

Section 8(4)

i. A company registered under this section shall not alter the provisions of its MOA 

& AOA without prior approval of the CG. 

ii. A company registered under this section may convert itself into company of any 

other kind of company after complying with prescribed conditions.

Section 8(5) if any other limited company has been formed with any of the objects 

specified for NGO and with the restrictions and prohibitions as mentioned for NGO, CG

may allow the company to be registered as NGO and thereupon the Registrar shall, on 

application, register such company as NGO. 

Section 8(6) The CG may, by order, revoke the licence granted to a company registered 

as NGO, if the company contravenes any of the requirements or conditions subject to 

which a licence was issued or the affairs of the company are conducted fraudulently

or in violation of the objects of the company or prejudicial to public interest, and 

without prejudice to any other action against the company under this Act, direct the 

company to convert its status and change its name to add the word "Limited" or the 

words "Private Limited", as the case may be, to its name and thereupon the Registrar 

shall, register the company accordingly.

But company shall be given a reasonable opportunity of being heard and a copy of 

such order shall be given to the ROC also.

                                                                        

Section 8(7) Where a licence is revoked, the CG may, by order, direct to wind up the

company OR to amalgamate with another NGO. But such order shall be made only after 

giving reasonable opportunity of being heard. 

Section 8(8) If amalgamation is ordered by CG then, notwithstanding anything to the 

contrary contained in this Act, the CG may, by order, provide for such amalgamation to 

form a single company with such constitution, properties, powers, rights, interest, 

authorities and privileges and with such liabilities, duties and obligations as may be 

specified in the order. 

Section 8(9) If such co. is wound up or dissolved, then remaining asset, may be 

transferred to another NGO and having similar objects, subject to such conditions as the 

NCLT may impose, OR may be sold and proceeds thereof credited to Insolvency and 

Bankruptcy Fund formed u/s 224 of the IBC, 2016.

Section 8(10) NGO shall amalgamate only with another NGO having similar objects. 

Section 8(11) In case of Default, the company shall be punishable with fine of minimum

Rs. 10 Lakhs but up to Rs. 1 Cr. and the directors and every officer of the company who 

is in default shall be punishable with imprisonment up to 3 years OR with fine of 

miniumum Rs. 25,000 but Up to Rs. 25,00,000 b with both.

BUT

In case of fraud, every officer in default shall be liable for action u/s 447.

Features of a Section 8 Company

1. It is formed for promoting commerce, art, science, sports, education, research, social 

welfare, religion, charity, protection of environment or any such other object.

2. The profits, if any, are applied in promoting its objects.

3. It prohibits the payment of dividends to its members.

4. The name of the Company can be incorporated without using the word “Limited” or 

“Private Limited” as the case may be.

5. There is no requirement of any minimum paid up capital. 

6. It is exempted from stamp duty registration. 

7. Many privileges and exemptions are available to such a company.

8. An OPC cannot function as a Section 8 Company. 

9. Section 8 company has its independent corporate legal entity, similar to private 

company, public company or a Limited Liability Partnership and hence enjoys 

credibility in the eyes of the public.

Exemptions available to Section 8 Company

a. Not required to have CS.

b. No need for minimum share capital.

c. Shorter notice period for general meetings.

d. No necessity to record minutes of meetings.

e. Only two directors required and Independent Directors not required.

f. Exemption regarding first meeting and other board meetings.

g. Directorship in more than 20 companies.

h. Relaxation in formation of certain Committees.

i. Certain decision allowed to be taken by circulation instead of at a meeting.

j. Disclosure of interest in related party transactions in some cases only.