Exemption to Section 8 Companies: Understanding the Special Privileges

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On August 6, 2025

Section 8 companies—often set up for promoting commerce, art, science, charity or any other useful object—enjoy a number of exemptions from the otherwise stringent compliance requirements prescribed for other companies under the Companies Act, 2013. These exemptions recognize the not-for-profit nature of Section 8 entities and aim to ease their governance burden, so they can focus resources on their core objectives rather than procedural minutiae.

Below is the comprehensive checklist of exemptions that apply to Section 8 companies. This checklist captures, verbatim, the specific sections or provisions of the Act and the corresponding descriptive notes outlining how each provision is relaxed for Section 8 entities.

Exemption for Section 8 Companies:
Section/Provision	Descriptive Note :
Section 2(24)	The Company Secretary of Section 8 Company need not be a member of the Institute of Company Secretaries of India
Section 2(68) & 2(71)	Section 2(68) defines a private company & public company respectively. Though the companies (amendment) Act 2015 has removed the minimum prescription of Rs.1 lakh & 5 lakh as minimum paid up capital for private limited & public companies respectively, the provisions for prescribing minimum paid up capital is still retained. However, the requirement of minimum- paid up capital shall not apply to section 8 companies.
Section 96(2)	Section 96(2) inter-alia covers time, date venue of annual general meeting. In case of Section 8 companies, the time, date and place of each annual general meeting are decided upon before-hand by the board of directors having regard to the directions, if any, given in this regard by the company in its general meeting.
Section 101(1)	Section 101(1) deals with notice of the General meeting with clear twenty one days notice. In case of Section 8 Companies 14 clear days notice is sufficient for a general meeting.
Section 118	Section 118 deals with minutes of proceedings of general/board and other meetings. Provision of Section 118 does not apply to Section 8 companies except that minutes may be recorded within thirty days of the conclusion of every meeting in case of companies where the articles of association provide for confirmation of minutes by circulation.
Section 136(1)	Section 136(1) deals with the rights of members to copies of audited financial statement, before twenty one days before the date of annual general meeting. Section 8 companies may send the audited financial statements 14 days before the date of annual general meeting.
Sub-section (1) of Section 149 and the first proviso to sub-section (1)	Section 149(1) and first proviso to sub-section (1) relates to minimum and maximum number of directors. It is not applicable to Section 8 Companies
Sub-sections (4), (5),(6), (7), (8), (9), (10),(11), clause (i) of sub-section (12) and sub-section (13) of section 149.	The cluster of sub-sections of section 149 given herein pertains to independent directors. These provisions will not apply to a Section 8 Company
Section 150	Section 150 deals with manner of selection of independent directors and maintenance of databank of independent directors, which is not applicable to Section 8 companies.
Proviso to sub-section (5) of section 152	Proviso to sub-section (5) of section 152 relates to appointment of independent directors. It is not applicable to section 8 companies
Section 160	Section 160 deals with right of persons other than retiring directors to stand for directorship. Section 160 shall not apply to section 8 companies whose articles provide for election of directors by ballot.
Section 165(1)	Section 165(1) deals with restrictions on number of directorships. Directorship of Section 8 Companies are not reckoned for this purpose.
Section 173(1)	Section 173(1) mandates convening of first board meeting within 30 days of incorporation and minimum of four board meeting every year, with a gap not exceeding 120 days between two consecutive meetings. With regard to Section 8 companies this section shall apply only to the extent that the Board of Directors, of such Companies shall hold at least one meeting within every six calendar months.
Section 174(1)	Section 174(1) states that the quorum for a meeting of the Board of Directors of a company shall be one third of its total strength or two directors, whichever is higher, and the participation of the directors by video conferencing or by other audio visual means shall also be counted for the purposes of quorum under this sub-section. In case of Section 8 companies the quorum for the board meetings shall be either eight members or twenty five per cent. of its total strength whichever is less. However, the quorum shall not be less than two members.
Section 177(2)	Section 177(2) requires audit committee to have majority of independent directors. It is not required for Section 8 Companies
Section 178	Section 178 pertains to nomination and remuneration committee and stakeholders’ relationship committee. Section 178 is not applicable to section 8 companies.
Section 179	Section 179(3) deals with resolutions to be passed at meetings of the Board. Section 179(3)(d), (e) and (f) pertains to resolution to borrow moneis, to invest funds of the company and to grant loans or give guarantee or provide security in respect of loans. These items may be decided by the Board by circulation in case of Section 8 companies.
Sub-section (2) of section 184	Section 184(2) prohibits participation of interested directors. In case of Section 8 Companies it shall apply only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees.
Section 189	Section 189 deals with register of contracts or arrangements in which directors are interested. Section 189 is applicable to section 8 companies only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees.

Key Takeaways

Facilitating Not-for-Profit Objectives: By carving out these exemptions, the law ensures Section 8 companies can direct maximum resources towards their charitable or promotional objectives rather than procedural compliance.
Board and Governance Flexibility: Reduced notice periods, relaxed quorum requirements and board meeting obligations provide operational agility without compromising transparency.
Financial Reporting Relief: Sending audited financial statements 14 days (instead of 21) prior to the AGM eases administrative timelines.
Exclusion of Independent Director Mandates: Sections relating to independent directors (149, 150, 152, 177, 178) are largely inapplicable, acknowledging that Section 8 companies often have different stakeholder structures.

Conclusion

The special exemptions granted to Section 8 companies under the Companies Act, 2013 strike a balance between accountability and operational efficiency. Non-profit promoters and directors should familiarize themselves with these reliefs to ensure statutory compliance is met in a streamlined manner—allowing them to devote their energies to the social, charitable, or promotional objectives that define their very purpose.