Do’s of Section 8 Company:

1. Name of the Company: As per rule 8(7) of the Companies (Incorporation) Rules, 2014, for the Companies under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc.
2. Articles of Association of a Section 8 Company: An Articles of Association of a Section 8 Company can have entrenchment clause in terms of provisions of section 5(3)
3. Holding of another Company: Section 8 company can promote another company and be a holding company of another company.
4. Alteration of object Clause: The objects of Section 8 Company can be altered by taking shareholders’ approval and approval of Registrar of Companies in terms of Section 8.
5. Election of directors by ballot: If election of directors by ballot is not prescribed in the Articles, then, section 160 applies and consequentially a deposit of Rs. 1 lac is mandatorily required to be taken from persons standing for director’s election
6. No. of Board Meetings: At least one meeting within every six calendar months.

Dont’s of Section 8 Company

1. One Person Company: A One Person Company (OPC) cannot be incorporated or be as a member of Section 8 Company
2. Proxy: In terms of Rule 19 of the Companies (Management and Administration) Rules, 2014, a member of a company registered under section 8 shall not be entitled to appoint any other person as his proxy unless such other person is also a member of such company
3. Directorship in Section 8 Companies: directorship in Section 8 Companies will not be counted for calculating the ceiling with respect to maximum number of directorships as prescribed under Section 165 of the Companies Act 2013.
4. Independent Director: It is not mandatory for a Section 8 Company to appoint an Independent Director
5. Bonus shares: A Section 8 Company is prohibited from issue of bonus shares to member, however it issue bonus shares to its employees.
6. Amalgamation: Section 8 Company cannot be amalgamated with a company which is not a Section 8 company