Section 8 company is incorporated under Section 8 of the Companies Act 2013. These are the companies which are working for charitable purposes and objectives. Every company incorporated under the Companies Act has to fulfill certain compliances on time. Similarly, board meetings and general meetings of a section 8 company are compliances. It is mandatory to conduct board meetings and general meetings of a section 8 company as per the governing law which is the Company Act 2013.
What is Section 8 Company?
In the Companies Act 2013 under Section 8 a type of company has been given which is formed for charitable purposes only. Such kinds of companies are known as NGOs. NGO which means non-government organization mostly works for the upliftment and welfare of the society. They can do so by engaging themselves in the promotion of education, arts, science, social welfare, etc. These companies are incorporated with the help of some rules and regulations. If those are missed there are chances that section 8 incorporation might be canceled or suspended. There are certain compliances of Section 8 companies, which they have to fulfill to save themselves from heavy penalties. Board meetings and general meetings of a section 8 company are one of them. Hence one needs to arrange board meetings and general meetings of a section 8 company after the incorporation of the company.
Board Meetings And General Meetings of a Section 8 Company in India
The Companies Act of 2013 offers multiple benefits, exemptions, and concessions to charitable organizations that are established as Section 8 companies in India. These benefits and concessions include various exemptions related to appointments, audits, and meetings. Such meetings are discussed below particularly focused on board meetings and general meetings of a section 8 company:
General Meetings for Section 8 Companies in India
Out of the board meetings and general meetings of a section 8 company will discuss the general meetings here. As per Section 101 of the Companies Act, it is a must for all companies to give a notice of 21 days before holding an annual general meeting (AGM) for members, trustees, and auditors. However, the time duration for Section 8 companies is different and that is only 14 days. A notice of 14 days prior needs to be given before the AGM, so that maximum participation will be there in the AGM. Directors have been given freedom hence they can choose the date, time, and venue of the AGM. The meeting must be held outside the company’s registered office. Also, the company needs to send copies of financial statements to the stakeholders at least 14 days before the Annual General Meeting.
AGM minutes are not to be recorded by the Section 8 company, only in that situation it is mandatory to record when articles of association made it mandatory. In such cases, after the meeting’s conclusion, the minutes may be recorded for up to 30 days. Section 8 companies with up to 1,000 or more than 1000 members need to offer e-voting in the Annual General Meeting as per Section 108 of the Companies Act 2013 and Rule 20 of the Rules of 2014. A proxy cannot be appointed as per Rule 19 of the Companies (Management and Administration) Rules of 2014.
Board Meetings for Section 8 Companies in India
Now out of the board meetings and general meetings of a section 8 company will discuss the board meetings here. Just like in AGMs (Annual General Meetings), Section 8 companies don’t have to write down notes of their board meetings unless their rules say they must. If they do, they should write these notes within 30 days after the meeting. In Section 8 companies, the board of directors doesn’t have to formally vote in their meetings to do things like borrow money, invest money, guarantee loans, or give loans. Instead, they can make these decisions by asking the directors for their opinions through written communication.
Minutes of the Board Meetings
Minutes of the Board Meetings
According to the exemption notification G.S.R. 466(E) dated 5th June 2015, Section 118 is not applicable on all Section 8 companies. If the company’s articles of association specify that meeting minutes must be approved by all directors, then these minutes should be prepared and confirmed within 30 days after the meeting concludes. However, if the articles of association don’t mention the need for minutes, a Section 8 Company is not required to create or distribute meeting minutes. It’s worth noting that this exemption is uncommon, as maintaining comprehensive and accurate meeting minutes is typically considered important for all types of companies.
Who can Become a Section 8 Company in India?
Under Section 8 of the Companies Act 2013, proper criteria have been given regarding who can become a Section 8 company in India. The answer to the above question of whether any kind of company can be registered as a Section 8 company in India or not depends upon that criteria. If any company fits the criteria given below can be registered as a section 8 company. One who wants to register as a section 8 company in India needs to satisfy the central government that they falls in the criteria given below:
- They must have a kind of object or purpose that is working for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object
- Profit must be used to achieve the objective of the company;
- It also intends to prohibit the payment of any dividend to its members,
Conclusion
A Section 8 company came into existence with the aim of propagating social welfare and other charitable purposes. They are not there with the profit-making intention. The Indian government provides various benefits, exemptions, and privileges to such kinds of companies. They do the same to encourage entrepreneurs to establish organizations that work for the welfare of society. Because a Section 8 company is considered a legal entity without independent decision-making capabilities, it relies on passing resolutions during the board meetings and general meetings of a section 8 company to make choices. To ease the regulatory burden on these companies and allow them to concentrate on their charitable objectives, the Companies Act provides them with exemptions from specific requirements concerning board meetings and general meetings of a section 8 company with other related matters.
