# Section 8 Company - Post Licence Consequences & Exemptions
## 1. Revocation of Licence - Powers of Central Government
When a Section 8 company's licence is revoked, the Central Government (CG) may, in public interest, order any of the following (this is a reasonable opportunity of being heard situation):
- Winding up under the Companies Act, 2013, OR
- Amalgamation with another company registered under Section 8 having:
- Similar objects
- Similar constitution
- Similar powers and rights (as defined by CG)
## 2. Treatment of Surplus Assets on Winding Up
After all liabilities are satisfied during winding up, if any assets remain, they may be:
| Option | Treatment |
|---|---|
| Option 1 | Transferred to another Section 8 company having similar objects (subject to T&C imposed by Tribunal) |
| Option 2 | Sold and proceeds credited to Insolvency and Bankruptcy Fund formed u/s 224 of IBC |
## 3. Restriction on Amalgamation
A Section 8 company can amalgamate ONLY with another Section 8 company having similar objectives. It cannot merge with a regular company.
## 4. Penalty for Default (Section 8(11))
| Defaulter | Minimum Fine | Maximum Fine |
|---|---|---|
| Company | Rs. 10 lakhs | Rs. 1 crore |
| Directors & every Officer in Default (OID) | Rs. 25,000 | Rs. 25 lakhs |
Special clause: If affairs of the company were conducted fraudulently, every OID is liable u/s 447 (fraud).
## 5. Concept Clarity Checks
1. Can a Section 8 company be incorporated with unlimited liability? — NO. A Section 8 company can only be a limited company.
2. Can an existing company seek licence u/s 8? — YES. In such case, it will drop the suffix "Ltd" or "Pvt Ltd".
3. Can a firm become a member in a normal public company? — NO. A partnership firm is not a separate legal entity.
## 6. Key Exemptions to Section 8 Companies
| Section | Exemption / Relaxation |
|---|---|
| 2(68) & 2(71) | No minimum PUSC required for private/public Section 8 companies |
| 2(85) | Definition of Small Company does NOT apply to Section 8 company |
| 96(2) | Date, time & place of AGM may be decided by Board (subject to direction given by members in GM) |
| 101(1) | Notice period for GM can be 14 clear days (instead of 21 days) |
| 118 | Not fully applicable. Minutes may be recorded within 30 days if Articles provide for confirmation by circulation |
| 136(1) | Circulation of FS allowed 14 days before AGM (instead of 21 days) |