SECTION -8 B-13.pptx non profitable organization

 NAME : NIKITHA PALLAVI NAKKA
 SRO : SRO0736390
 TOPIC : SECTION - 8 COMPANIES
 PROJECT : 4
 BATCH : 13 , ITT
 PLACE : VIJAYAWADA

 Definition
 features
 Formation
 Cancellation of license
 Winding up
 Punishment for contravention

 The Companies Act defines a Section 8
company as one whose objectives is
to promote fields of
 arts
 commerce,
 science,
 research,
 education,

 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.

 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.

 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.

 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.

 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.

 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.

 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.

 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;

 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.

 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.

 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

SECTION -8 B-13.pptx non profitable organization

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