Once a company is registered it is required to follow various formalities as per the Companies Act, 2013, such as getting its accounts audited, holding Board Meetings & Annual General Meetings, Filing of Annual Returns & various other documents with the Registrar of Companies.
A Company is formed with two sets of committees. The first is the General body, which comprises all the members/ shareholders of the company. The second one is the Board of Director, which is elected out of the general member. The General Members are normally permanent in nature subject to disqualification condition as may be provided in the articles of association of the company. The company’s Board of Director are elected for a period of 1 to 3 years in the Annual General Meeting of the members of company.
General Body
General body comprises all the members/shareholders of the company. A minimum of 2 members is required to form a Section 8 Company.
Membership
- A minimum of 2 members is required to form a Section 8 Company.
- Maximum there can be 200 members if it is incorporated as a private limited, but if it is incorporated as public limited then there is no limit as such.
Meetings
- Companies require a notice of 21 days which now reduces to having only 14 days u/s 101(1). Also, there is no requirement to follow Section 96(2) which had rules for time/place/restrictions on AGM. But time, date and place of each annual general meeting are to be decided before-hand by the Board of Directors with due regard to the directions if any given in this regard by the company in its general meeting. This means an AGM can take place at other than registered office, city and place different than office timing subject to General meeting directions that can be given.
- The minutes of the meeting is not necessary to be as per Section 118 provisions. But with the exception that if articles provide that minutes are required to be approved by circulation within 30 days requirements of financial statements, audit reports and other documents that are to be sent 21 days before AGM is done away with for these companies.
Governing Body
- Governing Body Comprises of the Board of directors under the section 8 company. The requirement to have independent directors (Section 150) takes place which is necessary. And corresponding provisions of Section 149 are not applicable.
Membership
- There is no limit on the minimum and no maximum (Section. 165) of directors. But to conduct a board meeting there should be minimum 2 boards of directors.
- The prescription under section 149(1) of Companies Act 2013 as to having Minimum of three directors for public limited company and two directors for private limited company and maximum of fifteen directors is not applicable to section 8 company and thus there is no prescription with respect to minimum or maximum directors in a section 8 Company.
Meetings
- Section 8 companies under company norms do not require holding the first meeting of the board within 30 days of incorporation of the company under the company law. A meeting of the directors will still be necessary once every six months.
- Other companies that need board meetings at least 4 times in a year (Section 173). But Section 8 Company, under the company law, can meet in 6 months in a year i.e. only 2 times. Amendment takes place for Section 174 which stands for a quorum. And now for Section 8 company, we have either eight or twenty-five per cent of total strength whichever is less as quorum subject to a minimum of two members. Powers of board mainly borrowing of money, investment of funds, to grant a loan, or give guarantee could only be exercised in board meetings. But now for Section 8 Company, it can be done by a circulation only.
