SECTION -8 B-13.pptx non profitable organization
- 2. NAME : NIKITHA PALLAVI NAKKA SRO : SRO0736390 TOPIC : SECTION - 8 COMPANIES PROJECT : 4 BATCH : 13 , ITT PLACE : VIJAYAWADA
- 3. Definition features Formation Cancellation of license Winding up Punishment for contravention
- 4. The Companies Act defines a Section 8 company as one whose objectives is to promote fields of arts commerce, science, research, education,
- 5. sports, charity, social welfare, religion, environment protection, or other similar objectives These companies were previously defined under Section 25 of Companies Act, 1956 with more or less the same provisions.
- 6. Charitable objectives: Section 8 companies do not aim to make profits. Their objectives are purely charitable in nature. They aim to further causes like science, culture, research, sports, religion, etc. No minimum share capital: Section 8 companies, unlike all other companies, do not require a prescribed minimum paid-up share capital.
- 7. Limited liability: Members of these companies can only have limited liability. Their liabilities cannot be unlimited in any case. Government license: Such companies can function only if they have the Central Government’s license. The Government can revoke this license as well.
- 8. Privileges: Since these companies possess charitable objectives, the Companies Act has accorded several benefits and exemptions to them. Firms as members: Apart from individuals and associations of persons, Section 8 also allows firms to be members of these companies.
- 9. A person or an association of persons can make an application to the Registrar of Companies using requisite forms to form a company with charitable objectives under Section 8 of Companies Act. The Central Government, if satisfied, can accept such an application upon any terms and conditions imposed under the license granted by it.
- 10. It is important to note that such companies can only be limited companies. All privileges and obligations of limited companies apply in this case. Further, these companies also do not need to include the words “Limited” or “Private Limited” in their names, as all other companies have to.
- 11. Since the existence of such companies is based on the license granted to them, they cannot even alter their memorandum or articles of association without the Central Government’s permission. They also cannot do anything that the license disallows.
- 12. Section 8 companies require a grant of a license by the Central Government. All such licenses are revocable as well on the following grounds: the company contravenes provisions of Section 8; terms of the license are violated;
- 13. when its conduct is fraudulent, or it violates its own objectives and public policy. The Government can even order the company to be wound-up or amalgamated with another similar company under certain circumstances. The Government has to hear the company before passing such orders.
- 14. Section 8 companies can wind-up or dissolve themselves either voluntarily or under orders given by the Central Government. If any assets remain after satisfaction of debts and liabilities upon such winding-up, the National Company Law Tribunal can order the transfer of these assets to a similar company. It can also order that they must be sold and the proceeds of this sale should be credited to the Insolvency and Bankruptcy Fund.
- 15. Any company that contravenes provisions of Section 8 is punishable with a fine ranging from Rs. 10 lakhs to Rs. 1 crore. Further, directors and officers of the company are liable to punishment with imprisonment up to 3 years and a fine between Rs. 25,000 to Rs. 25 lakhs. Such officers can also face prosecution under stringent provisions of Section 447 (dealing with fraud) if they conduct any affairs with fraudulent motives