Section 2 Section 8 (Section 23)

Apart from these initial difficulties faced for the constitution of a trust or society, the matters do not improve even after the formation of these bodies. The everyday carrying of management of a trust or society requires strict adherence to the rules and regulations laid down for the same which are complex and extensive in nature. There is very limited flexibility with respect to management issues in case of a trust or society, while on the other hand in case of a company very few restrictions have been imposed on a Section 8 company related to its management, giving it a great level of autonomy for self-determination. Every statute passed by the legislature lays down certain penal provisions related to the consequence of non-compliance

Also, generally a company secretary fulfilling all the requirements as lay down in section 2(24) is required to be appointed as the company secretary but this requirement has also been waived by the newly notified notifications of 2015. A possible reason for this exemption might be the fact that these companies are not per se engaged in main stream profit maximizing business activities, which gives them the opportunity to have a certain leeway in the requirements of their secretary. The same logic can also be applied to the relaxations given in case of the directors, whether it be removing the requirement of minimum number of directors under Section 149 or provisions related to independent directors or right of persons other than the retiring director to stand for directorship under Section 160 or the maximum number of directorships that can be held by a person under Section 165. All these provisions do not apply to the Section 8 companies on the rationale of them being involved in charitable activities and not the mainstream businesses. However, this provision can easily be manipulated or misused by appointing someone totally incompetent as a dummy secretary or putting any family member up as a company secretary. Though

However whether or not this provision is applicable to section 8 companies in its entirety remains an ambiguous matter, that is whether or not they have to be bound by the directions as stated in the section about the convening of a general meeting needs more clarification by the legislature. There are certain other relaxations related to the general meeting to be conducted by a charitable company. For instance the requirement of giving a 21 days’ notice before conducting a general meeting as required under Section 101 has been reduced to 14 days for these companies. A related provision under Section 136 which required that “copies of financial statements and documents be annexed thereto” can also be sent before 14 days instead of 21. Also the entire provisions of Section 118 relating to minutes of proceedings of general meetings; board meeting etc, shall not apply except when it has been laid down in the Articles of Association, in which case they have to be confirmed by circulation and recorded within 30 days .

These relaxations clearly give the company a great level of autonomy over the daily goings-on of its business away from the stringent restrictions imposed by the statute. The reason behind this relaxation seems to be to provide ease of carrying out the object of charity and not creating unnecessary