Section 8 Company – Revocation of Licence

# Revocation of Licence to a Section 8 Company

## Why revoke?

The Sec. 8 licence is granted on conditions of public benefit. If those conditions are broken, the privileges must be withdrawn.

## 1. Grounds for Revocation

The CG (or its delegate, the RD) can revoke the licence if:

• The company contravenes the conditions of the licence,
• Its affairs are conducted fraudulently, or
• Its objects are violated or are prejudicial to public interest.

On revocation, the ROC must add 'Limited' or 'Private Limited' to the company's name in the register.

## 2. Mandatory Opportunity of Hearing

Before revocation, the company must be given:

• A written notice of intention to revoke, AND
• An opportunity to be heard.

## 3. Post-Revocation – Winding Up or Amalgamation

After revocation, if the CG considers it in the public interest, it may direct the company to:

• Be wound up under the Companies Act, or
• Amalgamate with another Sec. 8 company having similar objects.

### CG's Powers in Amalgamation/Winding-up

• The CG approves and structures the amalgamation — determining the new entity's constitution, assets, powers, rights, and obligations.
• After winding up and clearing debts, leftover assets are transferred to:
• The Insolvency and Bankruptcy Fund (Sec. 224 of IBC, 2016), OR
• A similar Sec. 8 company.

This preserves the public-benefit character — surplus cannot go to members.

## 4. Penalties for Default in Sec. 8 Compliance