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01 May 2026
Section 8 Companies Exemptions & Relaxations Under the Companies Act, 2013
Exemptions & Relaxations for Section 8 Companies under the Companies Act, 2013
| Category | Provision / Area | Exemption / Relaxation (Detailed Explanation) |
|---|---|---|
| Structure & Capital | Minimum Paid-up Capital | A company incorporated under Section 8 is not required to maintain any minimum paid-up share capital. Unlike private and public companies defined under Sections 2(68) and 2(71), such entities may operate with any level of capital as deemed appropriate for achieving their non-profit objectives. |
| Company Secretary | Section 8 companies are permitted to appoint any individual as a Company Secretary, and such person is not mandatorily required to be a member of the Institute of Company Secretaries of India (ICSI), thereby relaxing the requirement under Section 2(24). | |
| Number of Directors | The statutory limits prescribed under Section 149(1)(b) regarding the minimum and maximum number of directors do not apply, allowing flexibility in structuring the Board based on operational needs. | |
| Directorship Limits | The ceiling on the number of directorships as prescribed under Section 165(1) is not applicable to directors of Section 8 companies, enabling individuals to hold positions in multiple such entities without restriction. | |
| Board Meetings | Frequency of Meetings | Section 8 companies are required to hold at least one Board Meeting in every six calendar months, as opposed to the quarterly requirement applicable to other companies under Section 173(1), thereby reducing compliance frequency. |
| Quorum | The quorum for Board Meetings is relaxed to either eight members or 25% of total strength, whichever is lower, subject to a minimum of two members, in accordance with Section 174(1). | |
| Resolution by Circulation | Matters specified under Section 179(3)(d), (e), and (f), which ordinarily require Board approval in meetings, may be passed by circulation in Section 8 companies without convening a formal Board Meeting. | |
| General Meetings & AGMs | Notice Period | A general meeting of a Section 8 company may be convened by giving a shorter notice of 14 clear days under Section 101(1), as opposed to the standard 21 days required for other companies. |
| AGM Scheduling | Under Section 96(2), the Board of Directors has the authority to determine the time, date, and place of the Annual General Meeting, subject to any directions issued by members in previous general meetings. | |
| Financial Statements | The audited financial statements, including annexures, may be circulated to members at least 14 days before the AGM, aligning with the reduced notice period. | |
| Minutes of Meetings | The provisions of Section 118 relating to maintenance of minutes are not strictly applicable. However, where the Articles of Association provide for confirmation by circulation, such minutes must be recorded within 30 days of the meeting. | |
| Directors & Committees | Independent Directors | The provisions of Sections 149(4) to 149(13) relating to independent directors, including their appointment, tenure, and duties, are not applicable to Section 8 companies. |
| Independent Director Databank | Section 150, which mandates selection of independent directors from a databank, is not applicable. | |
| Consent to Act as Director | Section 152(5), requiring filing of consent to act as director with the Registrar within 30 days, does not apply to Section 8 companies. | |
| Notice of Candidature | The requirement under Section 160 for notice of candidature for directorship is not applicable where the Articles of Association provide for election of directors by ballot. | |
| Board Committees | Section 8 companies are exempt from constituting the Nomination and Remuneration Committee and the Stakeholders Relationship Committee as required under Section 178. | |
| Audit Committee | While an Audit Committee may be constituted, there is no requirement to have a majority of independent directors on such committee as otherwise mandated under Section 177(2). | |
| Disclosures & Registers | Disclosure of Interest | The requirement under Section 184(2) for disclosure of interest by directors applies only where related-party transactions under Section 188 exceed ?1 lakh, thereby limiting disclosure obligations. |
| Register of Contracts | The obligation under Section 189 to maintain a register of contracts or arrangements in which directors are interested is applicable only when such transactions exceed ?1 lakh. | |
| Loans & Investments | No specific exemption has been provided under Section 186(7). However, a limited modification exists for companies with at least 26% government shareholding in relation to loans for industrial research and development. |
Conclusion
The exemptions granted to Section 8 companies under the Companies Act, 2013—primarily through MCA Notifications G.S.R. 466(E) dated 5 June 2015 and G.S.R. 584(E) dated 13 June 2017—demonstrate a conscious legislative approach to ease regulatory compliance for entities operating with charitable and non-profit objectives. These relaxations ensure that such companies can focus on their core social purposes while maintaining a reasonable level of governance and accountability.
Disclaimer
The contents of this document are based on the applicable legal provisions and information available as on date. While due care has been taken to ensure accuracy and completeness, no responsibility is assumed for any errors or omissions. Readers are advised to refer to the relevant statutory provisions, rules, and notifications. This document is intended for informational purposes only and should not be construed as legal advice.
From the desk of CS Sharath