# Section 8 Company - Revocation of Licence

A Section 8 company (non-profit) enjoys the privilege of dropping 'Limited' or 'Private Limited' from its name. The Central Government, which granted this licence, also retains the power to revoke it.

## When Revocation Happens

Upon revocation, the Registrar must add 'Limited' or 'Private Limited' against the company's name in the register — the company loses its special non-profit identity.

## Procedural Safeguards Before Revocation

The Central Government cannot simply revoke the licence. It must:

1. Give written notice of its intention to revoke the licence.

2. Provide an opportunity to be heard in the matter (principles of natural justice).

## Delegation to Regional Directors

The Central Govt. has delegated this power to Regional Directors.
However, the Central Govt. may:
Revoke such delegation at any time, OR
Itself exercise the powers if, in its opinion, doing so is necessary in the public interest.

## Consequences of Revocation - Three Options

Where a licence is revoked and the Central Government is satisfied it is essential in the public interest, it may by order direct any of the following:

Option	Action
1	Company converts its status and changes its name (adds 'Limited'/'Private Limited')
2	Company be wound up under this Act
3	Company be amalgamated with another Section 8 company having similar objects

## Treatment of Surplus Assets on Winding Up

If the Section 8 company is wound up/dissolved and assets remain after settling debts and liabilities:

They may be transferred to another Section 8 company with similar objects (subject to Tribunal conditions); OR
They may be sold and the proceeds credited to the Insolvency and Bankruptcy Fund formed under Section 224 of the Insolvency and Bankruptcy Code, 2016.

## Amalgamation Route - Detailed

When the CG is satisfied that amalgamation is essential in public interest, it may by order provide for amalgamation with another Section 8 company having similar objects, to form a single company with specified:

Constitution
Properties, powers, rights, interests, authorities and privileges
Liabilities, duties and obligations

Worked example

### Example 1

Example 1: ABC Foundation is registered as a Section 8 company for the promotion of education. The Central Government finds that ABC has been diverting donations for the personal benefit of its directors. Before revoking its licence, the CG must serve a written notice of intention to revoke and grant ABC an opportunity to be heard. After revocation, the Registrar will insert 'Limited' against ABC's name in the register.

### Example 2

Example 2: XYZ Charitable Co. (Section 8) is wound up. After paying all creditors, ₹50 lakhs remains. The Tribunal directs that ₹30 lakhs be transferred to PQR Welfare Co. (another Section 8 company with similar objects of promoting welfare) on conditions specified by the Tribunal, and the balance ₹20 lakhs be sold and credited to the IBC Fund under Section 224 of the Insolvency and Bankruptcy Code, 2016.

⚠️ Common exam mistakes

Confusing 'transfer to another Section 8 company' with 'transfer to members' — surplus assets can NEVER go to members of a Section 8 company.
Forgetting that the Central Government MUST give written notice and an opportunity to be heard before revocation; revocation is not automatic.
Assuming the residual fund goes to the Consolidated Fund of India — it actually goes to the Insolvency and Bankruptcy Fund under Section 224 of IBC, 2016.
Confusing 'similar objects' (required for amalgamation/asset transfer to another Section 8 co.) with 'any company' — both the transferee and amalgamating partner must be Section 8 companies with similar objects.

Bare-Act text Section 8 · Companies Act, 2013 · click to expand

Where a licence is revoked, the Central Government may, by order, if it is satisfied that it is essential in the public interest, direct that the company be wound up under this Act or amalgamated with another company registered under this section. If on the winding up or dissolution of a company registered under this section, after the satisfaction of its debts and liabilities, any asset remains, they may be transferred to another company registered under this section and having similar objects, subject to such conditions as the Tribunal may impose, or may be sold and proceeds thereof credited to the Insolvency and Bankruptcy Fund formed under section 224 of the Insolvency and Bankruptcy Code, 2016.

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