Questions about Section 8 Company members

1292 views 2 replies

:) Nitin

Beginner Consultant

5 Points Joined August 2020

Most of the associations and chambers registered under section 8 invite professionals or public to become their members by charging a fixed fees in such case my questions are -

1) Do such members act as shareholders of the company?
2) Do such members have legal obligations with MCA in future?
3) Can these members vote for directors election? or only shareholders may vote?
4) Can such members choose or vote for a leader who will act as catalyst or as representative of member group in any committee of association?
5) Do such members affect while amalgamation with another section 8 or converting into another company?
6) Can company directly cancel membership of such members in case of dispute or breach of regulations?

Looking forward.

Regards,

Nitin

Most of the associations and chambers registered under section 8 invite professional or general public to become members by charging a fixed fees in such case my questions are - Do such members act as shareholders of the company? Do such members have legal obligations with MCA in future? Do such members can vote for directors elections? Can such members choose or vote for a leader (to act as catalyst or to be included in committee of association) from themselves? Do such members can be obstacle while amalgamation with another section 8 or merging into another entity? Can company directly cancel membership of such members in case of dispute or breach of regulations?

Read more at: https://www.caclubindia.com/forum/how-would-you-define-member-of-section-8-company-and-their-purpose--577975.asp

Replies (2)

CA. Sourav Sarkar

Chartered Accountant

24588 Points Joined November 2019

1. Yes such members may not act as shareholders.

2. Yes they have a legal obligation to MCA

3. Yes members can vote.

4. No I think not. Make sure with others also

5. Yes it will affect the membership while amalgamation and merger

6. Yes company has the power to cancel and dismiss the members

Kapil kumar

SEO Executive

2328 Points Joined November 2024

In a Section 8 company, members are not shareholders in the conventional sense, as the company is formed for charitable or non-profit purposes and does not distribute profits or dividends to its members. Members admitted by paying a membership fee enjoy rights such as voting and participation in governance as defined in the Articles of Association (AOA) of the company, but they do not hold shares with economic benefits similar to a commercial company. Their liability is usually limited to the amount specified in the MoA/AoA, often the guarantee amount. Such members do not have independent filing or compliance obligations under the MCA; all statutory compliances are the responsibility of the company and its directors. Members’ obligations are restricted to what is contractually agreed in the company’s governing documents. To gain better clarity on registration and compliance for a Section 8 company, reaching out to expert professionals like Setindiabiz is often recommended.