List of Exemptions For Section 8 Company Under Companies Act, 2013

List of Exemptions For Section 8 Company Under Companies Act, 2013

June 17, 2020
     
Exemptions-Section-8-Company-Companies-Act-2013

MCA vide it's notification dated 05/06/2015 (Principal Notification) exempted the Section 8 companies from complying with some provisions of the Companies Act, 2013 subject to the condition that the company will ensure the protection of shareholder’s interests. MCA vide notification dated 13/06/2017 (Amendment Notification) made certain amendments in the principal notification. The exceptions, modifications & adaptations shall be applicable to a section 8 company that has not defaulted in filing its financial statements under section 137 of the Act, 2013 or annual return under section 92 of the Act, 2013 with the Registrar.

List of Exemptions For Section 8 Company Under Companies Act, 2013 

Sl. No.
Provisions of the Act
Exceptions/Modifications/Adoptions
1
Section 2(24)
The provisions of clause (24) of section 2 shall not apply.
The Company Secretary of Section 8 Company need not be a member of the Institute of Company Secretaries of India
2
Section 2(68)
The requirement of Minimum paid up share capital shall not apply.
Descriptive Note:
Section 2(68) defines a private company. Though the companies (amendment) Act 2015 has removed the minimum prescription of Rs.1 lakh as minimum paid up capital for private limited companies, the provisions for prescribing minimum paid up capital is still retained. However, the requirement of minimum- paid up capital shall not apply to section 8 companies.
3
Section 2(71)
The requirement of Minimum paid-up share capital shall not apply.
Descriptive Note:
Section 2(71) defines a public company. Though the companies (amendment) Act 2015 has removed the minimum prescription of `5 lakh as minimum paid up capital for public limited companies, the provisions for prescribing minimum paid up capital is retained. However, the requirement of minimum- paid up capital shall not apply to section 8 companies.
4
Section 96(2)
In sub-section (2), after the proviso and before the explanation, the following proviso shall be inserted, namely:-
Provided further that the time, date and place of each annual general meeting are decided upon beforehand by the board of directors having regard to the directions, if any, given in this regard by the company in its general meeting.
Descriptive Note:
Section 96(2) inter-alia covers time, date venue of annual general meeting. In case of Section 8 companies, the time, date 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.
5
Section 101(1)
In sub-section (1), for the words “Twenty one days” the words “Fourteen Days” shall be substituted.
Descriptive Note:
Section 101(1) deals with notice of the General meeting with clear twenty one days notice. In case of Section 8 Companies 14 clear days notice is sufficient for a general meeting.
6
Section 118
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.
Descriptive Note:
Section 118 deals with minutes of proceedings of general/board and other meetings. Provision of Section 118 does not apply to Section 8 companies 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)
In sub-section (1), for the words “twenty one days”, the words “fourteen days” shall be substituted.
Descriptive Note:
Section 136(1) deals with the rights of members to copies of audited financial statement, before twenty one days before the date of annual general meeting. Section 8 companies may send the audited financial statements 14 days before the date of annual general meeting.
8
Clause (b) and first proviso to Sub-section of Section 149 1) sub
Shall not apply.
Descriptive Note:
In Clause (b) and first proviso to Section 149(1) exemption is provided with respect to provisions related maximum number of directors and permission of shareholders for having director beyond 15.
9
Sub-sections (4), (5), (6), (7),
(8),(9),(10), (11),
clause (i) of sub- section (12) and
sub-section (13)
of section 149.
Shall not apply.
Descriptive Note:
The cluster of    sub-sections of section 149 given herein pertains to independent directors. These provisions will not apply to a Section 8 Company.
10
Section 150
Shall not apply.
Descriptive Note:
Section 150 deals with manner of selection of independent directors and maintenance of databank of independent directors, which is not applicable to Section 8 companies.
11
Proviso to sub- section (5) of
section 152
Shall not apply.
Descriptive Note:
Proviso to sub-section (5) of section 152 relates to appointment of independent directors. It is not applicable to section 8 companies.
12
Section 160
Shall not apply to companies whose articles provide for election of directors by ballot.
Descriptive Note
Section 160 deals with right of persons other than retiring directors to stand for directorship. Section 160 shall not apply to section 8 companies whose articles provide for election of directors by ballot
13
Section165(1)
Shall not apply.
Descriptive Note:
Section 165(1) deals with restrictions on number of director- ships. Directorship of Section 8 Companies are not reckoned for this purpose.
14
Section 173(1)
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.
Descriptive Note:
Section 173(1) mandates convening of first board meeting within 30 days      of incorporation and minimum of four board meeting every year, with a gap  not exceeding 120 days between two consecutive meetings. With regard to Section 8 companies this section 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.
15
Section 174(1)
In sub-section (1),-
(a)   for the words “one-third of its total strength or two directors, whichever is higher”, the words “either eight members or twenty five per cent. of its total strength whichever is less” shall be substituted;
(b)      the following proviso shall be inserted, namely:-
“Provided that the quorum shall not be less than two members”.
Descriptive Note:
Section 174(1) states that the quorum for a meeting of the Board of Directors of a company shall be one third of its total strength or two directors, whichever is higher, and the participation of the directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum under this sub-section. In case of Section 8 companies the quorum for the board meetings shall be either eight members or twenty five per cent of its total strength whichever is less. However, the quorum shall not be less than two members.
16
Section177(2)
The words “with independent directors forming a majority” shall be omitted.
Descriptive Note:
Section 177(2) requires audit committee to have majority of independent directors. It is not required for Section 8 Companies
17
Section178
Shall not apply
Descriptive Note:
Section 178 pertains to nomination and remuneration committee and stakeholders’ relationship committee. Section 178 is not applicable to section 8 companies
18
Section179
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.
Descriptive Note:
Section 179(3) deals with resolutions to be passed at meetings of the Board. Section 179(3)(d),(e) and (f) pertains to resolution to borrow monies, to invest funds of the company and to grant loans or give guarantee or provide security in respect of loans. These items may be decided by the Board by circulation in case of Section 8 companies.
19
Sub Sec (2)of section 184
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.
Descriptive Note:
Section 184(2) prohibits participation of interested directors. In case of Section 8 Companies it 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.
20
Sub-section (7) of
section 186.
Modification in Section 186(7) The provisions with respect to minimum rate of interest shall not apply to a company in which twenty-six per cent. or more of the paid-up share capital is held by the Central Government or one or more State Governments or both, in respect of loans provided by such company for funding Industrial Research and Development projects in furtherance of its objects as stated in its memorandum of association
21
Section 189
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.
Descriptive Note:
Section 189 deals with register of contracts or arrangements in which directors are interested. Section 189 is applicable to section 8 companies 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.

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