The government of India have recently notified many exemptions applicable the companies incorporated under section 8 of the companies Act, These are the companies formed with the object of doing nonprofit business activities.
The government notified following Exemptions to Section 8 Company under the companies act 2013.
A A Section 8 Company can appoint company secretary who does not fall in the definition of company secretary under Section 2(24). A company secretary has been defined to mean a member of the institute of company secretaries of India (ICSI). However with this exemption in place a section 8 company can appoint any person as company secretary even if that person is not a member of ICSI.
B A Section 8 company need not have minimum paid up share capital as prescribed under Section 2(68) and Section 2(71) for a private and a public company respectively. Thus the companies incorporated under section 8 is free to have any share capital.
C The time, date and place of each AGM can be decided before hand by the Board of directors having regard to the directions, if any , given in this regard by the company in its general meeting. [second provision to section 96(2)]. The company can fix the next AGM date in the meeting of shareholders and based on the instructions the board can call for the AGM. in ordinary companies the board of directors alone have power to call for AGM, However in case of section 8 company this power may be exercised by the shareholders.
D A section 8 company can call a general meeting by giving clear 14 days notice. [Section 101(1)]. In case of companies other than the section 8 company a shareholders meeting can be called only by giving a notice calling such an AGM after 21 clear days. However a section 8 company can now call an AGM or EGM by giving just 14 days of clear notice
E A section 8 company need not comply with the requirements stipulated under section 118 dealing with Minutes of Proceedings of general meetings, meeting of Board of Directors and other meeting and resolutions passed by postal ballot. However, minutes may be recorded within thirty days of the conclusion of every meeting in case of companies where the articles of association provide for confirmation of minutes by circulation.[section 136(1)]
F A section 8 company can send a copy of the financial statements, including consolidated financial statements, if any, auditor’s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting to its members not less than fourteen before the date of the meeting.[section 136(1)]
G A section 8 company need not comply with the requirement of minimum and maximum number of directors as stipulated under section 149(1) and first proviso thereof.
H A section 8 company need not appoint independent directors. Such companies are exempted from requirement of sub-sections (4) , (5) , (6) ,(7) ,(8), (9) , (10) , 12(i) and (13) of sections 149 and 150.
I A section 8 company need not obtain consent letter from directors and file the same with RoC within 30 days of appointment as required under section 152(5).
J A section 8 company need not comply with requirements of section 160 with respect to notice of candidature for appointment of a director other than a retiring director if the Articles of association of such company provide for election of directors by ballot
K The restrictions in section 165(1) with respect to limit on directorship will not apply for section 8 companies.
L A section 8 company can hold meetings of Board of Directors once in every six calendar months. [section174(1)] which is in contrast with quarterly requirement of holding board meetings.
M The quorum requirement for Board meetings of a section 8 company shall be either 8 members or 25% of total strength whichever is less. However, the quorum shall not be less than 2 members.[section174(1)]
N A section 8 company can have Audit Committee without independent directors. [section 177(2)]
O A section 8 company need not comply with requirements of section 178 with respect to constituting Nomination and Remuneration Committee and Stakeholders relationship committee.
P A section 8 company may decide following matters specified under section 179(3) by passing resolution by circulation; 1. To borrow monies; 2. To invest the funds of the company; 3. To grant loans or give guarantee or provide security in respect of loans;
Q A section 8 company need to comply with section 184(2) and section 189 requirement only in case of transactions pertaining to section 188 where the terms and conditions of the contract or arrangement exceeds Rs. 1,00,000.