Incorporation of a Section 8 Company Under Companies Act, 2013

Where it is proved to 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

(a) Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(b) Intends to apply its profits, if any, or other income in promoting its objects; and

(c) Intends to prohibit the payment of any dividend to its members,

the Central Government may issue licence on such conditions as it deems fit. [Section 8(1)]

Points to be kept in mind before incorporation of a Section 8 Company:

  • 8 Co. can only be incorporated as a Limited Company.
  • Decide regarding the proposed name to be applied, objects to be carried by the Company, proposed registered office address, authorized capital, number of promoters, number of directors, and number of shares to be subscribed by each promoter.
  • The name of the company should be in consonance with the principal objects of the company as set out in the memorandum of association. Every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum. [Rule 8(2)(b)(ii) of Companies (Incorporation) Rules, 2014]
  • The proposed name should not fall in the ambit of undesirable names specified in Rule 8 of Companies (Incorporation)Rules, 2014
  • Name of Section 8 Company shall include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral trust and the like words. [Rule 8(7) of the Companies (Incorporation) Rules, 2014]
  • Objects of Section 8 Company must be the promotion of Commerce, Art, Science, Sports, Education, research, social welfare, religion, Charity, protection of environment or any such other object [Section 8(1)(a)]
  • It should intend to apply its profits, if any or other income in promoting its objects. [Section 8(1)(b)]
  • It should intend to prohibit the payment of dividend to its members. [Section 8(1)(c)]
  • No need to add the word Limited or Private Limited to its name.[Proviso to Section 4(1)(a) and Section 8(1)]
  • License from Central Government is required to be taken. (Section 8(1)
  • A partnership firm is allowed to be a member of the Section 8 company [Section 8(3)]
  • Section 8 company shall enjoy all the privileges and be subject to all the obligations of limited companies. [Section 8(2)]
  • There must be at least 2 or 3 subscribers to the memorandum in case company is proposed to be incorporated as private company or public company respectively. [Section 3(1)(a) and Section 3 (1)(b)]
  • Minimum number of Directors required is 2 Directors or 3 Directors, in case company is proposed to be incorporated as private company or public company respectively with a maximum limit of up to 15 Directors. A Company may appoint more than 15 directors after passing a special Resolution in a general Meeting. [Section 149(1)(a) (b)]
  • Section 8 company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.[(Section 149(3)]
  • All the Directors should have valid DIN. (In case the proposed directors dont have a Director Identification number (DIN) allotted to them, Pl. Ref. procedure for DIN Application.)
  • Digital Signature for any one of the Director is required to digitally sign the E-Forms to be submitted with the Registrar of Companies.

KNOW MORE PROCEDURE FOR INCORPORATION OF A SECTION 8 COMPANY :- https://lexcomply.com/3i0w

Provisions under Companies Act, 2013

Various Committees and provisions under Companies Act, 2013

 

  1. CSR Committee (Section 135 of Companies Act 2013)

Every company having the following criteria shall contribute in every financial year, at least two per cent. Of the average net profits of the company made during the three immediately preceding financial years

Net Worth: Rs. 500 Crores     Turnover: Rs. 1000 Crores          Profits: Rs. 5 Crores

  1. Audit Committee (Section 177 of Companies Act 2013)

Every public company having the following criteria shall constitute an audit committee .The paid up share capital or turnover or outstanding loans, or borrowings or debentures or deposits, as the case may be, as existing on the date of last audited Financial Statements shall be taken into account for the purpose

Paid up Capital: Rs. 10 Crores   Turnover: Rs. 100 Crores       O/s Loans: Rs. 50 Crores

  1. Nomination and Remuneration Committee (Section 177 of Companies Act 2013)

The Board of Directors of every listed company and the companies under following criteria shall constitute the Nomination and Remuneration Committee consisting of three or more non-executive directors out of which not less than one-half shall be independent directors

Paid up Capital: Rs. 100 Crores             O/s Loans: Rs.50 Crores

  1. Vigil Mechanism (Section 177 of Companies Act 2013) Every listed company or following class of companies, shall establish a vigil mechanism for directors and employees to report genuine concerns

 O/s Loans: Rs. 50 Crores

  1. CARO (Companies Auditor Report Order, 2016)

It shall apply to every company including a foreign company as defined in clause (42) of section 2 of the Companies Act, 2013 (18 of 2013 except– 1. Insurance Companies 2. Banking Companies 3. Section -8 Companies  4. One Person Company and a Small Company   5. Private Company not being a holding or a subsidiary company of a public company having the Following criteria during the Financial Year as per the Financial Statements:

Paid up Capital: Rs.1 Crore     Borrowings: Rs.1 crore           Profit: Rs. 10 Crores

  1. XBRL (Extensible Business Reporting language)

The companies following under following criteria are required to file their financial statements using XBRL Mode and the companies listed with any Stock Exchange(s) in India and their Indian subsidiaries; or (r (i)all companies who were required to file their financial statements for FY 2010-11. However, banking companies, insurance companies, power companies and Non-Banking Financial Companies (NBFCs) are exempted.

Paid up Capital: Rs.5 Crores           Turnover: Rs. 100 Crores                     

  1. MGT-8 (Section 92(2) of Companies Act 2013)

Applicable for Listed Companies and the Companies under the following criteria

Paid up Capital: Rs. 10 Crores        Turnover: Rs. 50 Crores                     

  1. Internal Audit (Section 138 of Companies Act 2013)

Every listed company:      Always applicable

In the case of Unlisted Public companies, the following criteria should be fulfilled

 Paid up Capital: Rs. 50 Crores    Turnover: Rs. 200 Crores    O/s Loans: Rs. 100 Crores 

 O/s Deposits: Rs. 25 Crores

In the case of Private companies, the following criteria should be fulfilled

 Turnover: Rs.200 Crore               O/s Loans: Rs. 100 Crore

  1. Women Director (Section 149 of Companies Act 2013)

Every listed Company:    Always applicable

Every other public Company, the following criteria should be fulfilled

Paid up Capital: Rs. 100 Crores         Turnover: Rs. 300 Crores                  

How to Deal With Sexual Harassment at Work Place?

7 things you can do to handle a case of sexual harassment at the workplace

harrassementHandling sexual harassment at the workplace can be tricky business. At stake is not just the morale and the productivity of employees, but also the very reputation and growth of the company. Here are some things you should consider as an employer.

1. Assess the Complaint: Insist on a written complaint. Where the aggrieved woman is unable to make a complaint on account of her physical or mental incapacity or death or otherwise, her legal heir or any person on her behalf may make the complaint.

2. Reconciliation: If there is a miscommunication or the matter is of trivial nature, the mater should first be tried to be resolved with reconciliation.

3. Form an Internal Committee as soon as you can: Assess the date of incident and in case of a series of incidents, within a period of three months from the date of last incident. During the pendency of an inquiry, on a written request made by the aggrieved woman, the Internal Committee may recommend to the employer to –

(a) transfer the aggrieved woman or the respondent to any other workplace; or
(b) grant leave to the aggrieved woman up to a period of three months: or
(c) grant such other relief to the aggrieved woman as may be prescribed.
(d) the leave granted to the aggrieved woman under this section shall be in addition to the leave she would be otherwise entitled.

These recommendations shall be implemented by you as an employer.

4. Assess the defense of the accused person, statement of witness, camera recordings, call records if relevant. It must be ascertained whether or not the allegations are made to settle personal grudges.

5. If Respondent is found Guilty: Take action in accordance with the provisions of the service rules applicable. Where no such rules have been made, salary shall be deducted as appropriate to be paid to aggrieved or her legal heirs within 60 days. Such misconduct can also be considered a violation of service norms of company/workplace.

6. Punishment for false or malicious complaint and false evidence

Where the Internal Committee arrives at a conclusion that the allegation against the respondent is malicious, the aggrieved woman or any other person making the complaint has made the complaint knowing it to be false or the aggrieved woman or any other person making the complaint has produced any forged or misleading document, it may recommend to the employer or the District Officer, as the case may be, to take action against the woman or the person who has made the complaint.

7. An additional complaint can also me made Under section 354/376 IPC and all above proceedings shall not made public.