What are the Benefits of Company with Charitable Purpose Objectives?
Companies involved in charitable activities or have charitable objects are governed by Section 8 of Companies Act, 2013. A company is said to be a charitable company if Central Government is satisfied that a limited company formed has promotion of commerce, science, arts, sports, education, protection of environment, religion, social welfare etc. as its sole object. Secondly, that it doesn't intend to earn profits and apply it in promotion of its objects. Thirdly, no dividend will be paid to its members. These are mandatory conditions and none of them must be violated. Benefits of Company with Charitable Purpose Objectives.
Benefits enjoyed by Charitable Companies (Sec .8)
Section 8 companies are formed solely for charitable purposes and not to earn profits. As their objective is to serve, Companies Act, 2013 and other laws provide certain relaxations to them.
While they are given certain exemptions, they are also asked to strictly adhere to provisions mentioned under Section 8 of the Act. Some of the benefits enjoyed by companies with charitable purpose objectives are:
- Section 8 companies are exempted from appointing company secretaries as defined under Company Secretaries Act, 1980. They can appoint personnel without the professional degree as secretary.
- They do not need to maintain minimum paid up capital. Generally registration of private limited company and public limited company requires a minimum paid-up capital of ₹1 lac and ₹5 lacs respectively but Section 8 companies are exempted from maintaining that.
- Section 8 companies are also exempt from maintaining minutes of general meetings, board meetings etc. which normally needs to be maintained mandatorily and that too in a proper manner. However, if the minutes of any meeting is to be distributed to shareholders, then such minutes must be recorded within 30 days of the meeting being held.
- Section 8 companies also enjoy a relief of 7 days wherein they can send notice of a general meeting 14 days before the date of the meeting instead of 21. This benefit is granted under Section 101 of the Act.
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