Mr. Purushottam along with his six friends desires to incorporate a Section 8 Company under the Companies Act, 2013. He is seeking your advice in…
CA Intermediate · Corporate and Other Laws · MTP · May 2026
Mr. Purushottam along with his six friends desires to incorporate a Section 8 Company under the Companies Act, 2013. He is seeking your advice in the following matters: (i) What is the minimum paid-up capital requirement in case of a Section 8 Company? (ii) Whether a firm can be member of the Section 8 Company? (iii) Whether the Section 8 Company can pay dividend to its members? Advise, Purushottam with reference to the provisions of Companies Act, 2013.
Suggested Answer and Working Notes:
(i) The requirement of having a minimum paid up share capital shall not apply to a section 8 company vide notification dated 5th June 2015. (ii) Yes, under section 8 (3) of the Companies Act, 2013, a firm may be a member of the company registered under section 8. (iii) According to Section 8 (1) (c) of the Companies Act, 2013, section 8 company cannot pay dividend to its members as it prohibits the payment of dividends to its members.
Topics: Incorporation of Company and Matters Incidental Thereto
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