In exercise of the power conferred by clauses (a) and (b) of sub-section (l) of Section 462 and in pursuance of sub-suction (2) of said Section read with Section 8 of the Companies Act, 2013 (l8 of 2013), and in supersession of notifications issued under section 25 of the Companies Act, 1956 (l of 1956) except as respects things done or omitted to be done before such supersession, Central Government in the interest of public, hereby its notification dated 5th June, 2015 Exempted Section 8 Company from the compliance of following provision:
1. Section 2(24) The Definition Of The 'Secretary'
The provisions of clause (24) of section 2 shall not apply. Section 8 Companies are not liable to appoint a practicing CS as its Company Secretary.
2. Section 2(68) The Definition Of 'Private Company'
The requirement of having minimum paid-up share capital shall not apply.
3. Section 2(71) The Definition Of 'Private Company'
The requirement of having minimum paid-up share capital shall not apply.
4. Section 96(2) Annual General Meeting
In sub-section (2), after the proviso and before the explanation, the following proviso shall be inserted, namely:-
Provided further that the time, and place of each annual general meeting are decided upon 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.
A general meeting may be called by providing a notification.
5. Section 100(1) Notice Of Meeting:
In sub-section (l), for the \words "twenty-one days", the words "fourteen days" shall be substituted.
6. Section 118 Minutes Of Proceedings Of General Meeting, Meeting Of Board Of Directors And Other Meeting And Resolutions Passed By Postal Ballot
The section shall not apply as a whole except that 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.
7. Section 136(1) Right Of Member To Copies Of Audited Financial Statement
In sub-section (l), for the \words "twenty-one days", the words "fourteen days" shall be substituted.
8. Section 149(1) And Proviso To Subsection (1)
Section 149(1) of the Act does not apply to the Section 8 entities; such companies are not obligated to appoint the independent Director. Moreover, for the said reason, the audit committee of such a company shall also not obligate to have Independent Directors as a member of its Board.
9. Sub-Sections (4), (5), (6), (7), (8), (9), (10), (11), Clause (I) Of Subsection (12) And Subsection (13) Of Section 149
Shall not apply.
10. Section 150 Manner Of Selection Of Independent Directors And Maintenance Of Databank Of Independent Directors, Proviso To Sub-Section (5) Of Section 152 & Section 160 Right Of Persons Other Than Retiring Directors To Stand For Directorship
There are various sections such as Section 150, 152(5), 160, so on and so forth that do not cover the Section 8 companies.
In respect of Section 160, it shall not apply to companies whose articles provide for election of directors by ballot.
11. Section 165(1) Number Of Directorships
Directorship in Section 8 Companies shall not be considered for estimating the ceiling regarding the maximum no. of directorships provided u/s 165 of the Act.
12. Section 173(1) Meetings Of Board
Shall apply only to the extent that the Board of Directors, of such Companies shall hold at least one meeting within every six calendar months.
13. Section 174(1) Quorum For Meetings Of Board
In sub-section (1),
For the words "one-third of its total strength or two, directors, whichever is higher", the words "either eight members or twenty five percent of its total strength whichever is less" shall be substituted:
the following proviso shall be inserted, namely:-
"Provided that the quorum shall not be less than two members".
14. Section 177(2) Audit Committee
The words "with independent directors forming a majority" shall be omitted.
15. Section 178 Nomination And Remuneration Committee And Stakeholders Relationship Committee
Section 8 Entities is not required to comply with the provisions of above mentioned section.
16. Section 179 Powers Of Board
Matters referred to in clauses (d), (e) and (f) of sub-section (3) may be decided by the Board by circulation instead of at a meeting.
17. Section 184(2) Disclosure Of Interest By Director
Shall apply 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.
18. Section 189 Register Of Contracts Or Arrangements In Which Directors Are Interested
Shall apply 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.
*The companies covered under Section 8 of the Companies Act 2013, while complying with such exceptions, modifications, and adaptations, as specified aforesaid, shall ensure that the interests of their shareholders are protected.
Conclusion: As the Section 8 Companies are helping the Government with philanthropic activities with assistance of experts on the Board of the Companies, it has been provided various exemptions to ensure that they are relieved from the burden of compliance and which are much needed to aid these Companies.
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