following guest post is contributed by Nitu
Poddar of Vinod Kothari & Co. The author may be contacted at
dated June 5, 2015, the Ministry of Corporate Affairs (“MCA”) exempted Section
8 companies, government
companies private companies and nidhi companies from complying with certain
provisions of the Companies Act, 2013 (“Act, 2013” or “Act” or “CA 2013”) as
mentioned below subject to the condition that the company ensures protection of
shareholders’ interests. The exemption
notification has been published in Official Gazette.
exemptions have been made available for section 8 companies:
8 companies need not appoint a qualified professional as its company secretary.
the requirement of having a minimum paid-up share capital for incorporating a
private or a public company has been done away with by way of the Companies
(Amendment) Act, 2015, a Section 8 company also need not comply with the same.
8 companies can appoint more than fifteen directors without passing a special
resolution. A Section 8 company need not appoint an independent director.
reads “Sub-section (1) of section 149 and first proviso to sub-section (1)
shall not apply.”
section 8 company, an explicit mention that the first proviso to 149(1) again
shall not apply to a Section 8 company creates a confusion as to whether the
second proviso to 149(1) that provides for appointing a women director by
companies having paid-up share capital of Rs 100 crore or more or turnover of
Rs 300 crore or more shall apply to a section 8 company having such paid-up
share capital or turnover.
of any proviso(s) or explanation(s).
independent director, all consequential sub-sections of section 149 viz sub-sections (5), (6), (7), (8), (9), (10), (11), clause (i) of
sub-section (12) and sub- section (13) of section 149, section 150 and
proviso to section 152(5) relating to independent directors shall also not
apply to section 8 company.
company shall not require independent directors as its members.
165(1) that provides for the maximum number of directorships that a person can
hold including alternate directorship to be twenty companies – shall not be
applicable to a section 8 company.
8 companies need not have a nomination and remuneration committee nor a
stakeholders relationship committee.
provisions to section 8 company with modifications
to the proviso to section 96(2) of the Act, a Section 8 company can hold its
annual general meeting on a National Holiday, beyond business hours and at a place
other than a place which is in the same city, town or village where the
registered office of the company is situated subject to any directions in this regard given by the company in a general
to Section 101(1) of the Act, a Section 8 company can call a general meeting by
giving at least fourteen days notice instead of twenty-one days notice.
the documents such as financial statements along with the auditor’s report etc.
which are to be laid before the general meeting as per section 136(1) of the
Act shall be sent to every person entitled to receive such documents not less
than fourteen days before the meeting instead of twenty-one days.
dealing with the preparation and recording of minutes of proceedings of minutes
of meeting of members and/or board of directors of a company shall not apply to
a Section 8 company except that the minutes must be recorded within thirty days
of the meeting where the articles of association of the company provides for
confirmation of minutes by circulation.
company, unless the articles so provide, need not prepare and record the
minutes within thirty days of the meeting.
for the said reservation of Section 118, a Section 8 company need not have to
comply with the Secretarial Standard with respect to general and Board meetings
i.e. SS-1 and SS-2 respectively.
dealing with right of persons other than retiring director to stand for
directorship by serving a notice to the company along with deposit of one lakh
rupees shall not be applicable to such Section 8 companies whose articles
provide for election of directors by ballot.
relating to the number and frequency of the meeting of board of directors shall
not apply to a Section 8 company to the extent that the board of directors of
such company shall hold at least one meeting within every six calendar months.
a Section 8 company shall be either eight members or twenty five percent of its total strength of the board
whichever is less. However the quorum shall not be less than two members.
Board to be exercised at the meeting as per sub-section (d), (e) and (f) of
section 179(3) may, for a Section 8 company, be decided by the board by
circulation instead of at the meeting. The resolutions for borrowing of monies,
investing the funds of the company and granting loans or giving guarantees or
providing security in respect of loans can be passed by circular instead of at
contract or arrangement as per section 184(2) shall be applicable to a section
8 company only if the transaction with reference to section 188 on the basis of
terms and conditions of the contract or arrangement exceeds one lakh rupees.
arrangements in which the directors are interested shall be maintained only if
the transaction with reference to section 188 on the basis of terms and
conditions of the contract or arrangement exceeds one lakh rupees.
of these reduce the compliance requirements under the Companies Act, 2013 for
section 8 companies.