In a recent notification, the Ministry of Corporate Affairs provided for simplification of Sect...
This article talks about, relaxing provisions provided to Section 8 companies under the Companies Law 2013. It is incorporated under the head of the Section 8 Companies Registration.
According to the Companies Act, 2013, Section 8 can be defined as, those companies which in accordance with the satisfaction of the Central Government that a person or an association of persons, proposed to be registered under this Act as a Limited Company and the license is issued by the Central Government on such conditions as it may deem fit.
The major objectives of Section 8 companies are:
Section 8 companies are:
There are certain exemptions provided to section 8 companies related to compliance. It is a Non-Profit company, where the specific provisions under the Companies Act, 2013 will not apply.
The following exemptions would apply to section 8 companies:
As per the new notification, they do not have to appoint a company secretary. This is the most significant reduction for non-profit companies.
The requirement of minimum paid-up capital of Rupees 1 Lakh, by Private Limited Companies, will no longer be applicable, in case the company is registered . It will lower the cost of registration for non-profit companies under Section 8 Companies Registration. The relief was granted to the Company under Companies Amendment Act, 2015 for all Private Limited Companies.
The requirement of minimum paid-up capital of Rs 5 Lakhs by Public Limited Companies will no longer be applicable in the case of section 8 Companies.
The Annual General Meetings (AGM) for the Companies can be convened after the short notice period of 14 days under section 108 of Companies Act, 2013. This is in contrast to the previous provision, in which the minimum notice period is 21 days.
For the Companies Act, 2013, there is no need to maintain the records of meetings for the non-profit companies. Section 118 of the Companies Act requires companies to keep official records of meetings.
Only where the Articles of Association of the companies require that minutes are to be confirmed by the circulation, then minutes must be recorded and provided within 30 days.
Copies of the audited financial statements and documents can be sent 14 days to the members instead of 21 days.
According to Section 149 of the Companies Act, 2013, private companies and public companies require two to three directors. However, section 8 companies, may have any number of directors, and the requirement of passing a special resolution for appointing more than 15 directors is not required.
There is no requirement to appoint an independent director for this company.
The companies are required to hold one Board Meeting within six months. As the companies have to keep four board meetings annually will not apply.
Section 8 companies are not required to conduct Board meetings for passing any resolution.
The details of the related parties have to be entered in the register only when the transaction exceeds Rupees 1 Lakh. Section 184(2) is amended which is in compliance with the requirements of the act.
This amendment aims to reduce the burden from the non-profit companies (Section 8 Companies) under the Companies Act, 2013. Compliances have changed as a result of the above amendment. Board Meetings can be held in 14 days instead of 21 days. The reduction of compliances is to reduce the cost burden for Section 8 Companies.
Read our article:Section 8 Company Registration: A Step by Step Guide