India: Update On Companies Act, 2013 - Exemptions To Non-Profit Companies

The (Indian) Ministry of Corporate Affairs recently issued a notification dated 5 June, 2015 providing that various provisions of the Companies Act, 2013 ("Companies Act") will not apply or will apply with exceptions, modifications and adaptions to a body to which a licence is granted under the provisions of section 8 of the Companies Act i.e. companies with charitable objects, etc ("Non-Profit Companies"). These exceptions/modifications available to Non-Profit Companies have been set out below.

  1. The minimum paid up share capital requirement for a public and a private company will not be applicable to Non-Profit Companies.1
  2. The notice for general meeting and circulation of financial statements may be at the notice of 14 days instead of 21 days for Non-Profit Companies.2
  3. The requirement for holding meetings of the board of directors will apply to Non-Profit Companies only to the extent that the board of directors are required to hold at least one meeting within every six calendar months.3
  4. The quorum requirement for meeting of the board of directors to be one-third of its total strength or 2 directors, whichever is higher will be modified for Non-Profit Companies to be either 8 members or 25% of its total strength, whichever is less subject to a minimum of 2 members.4
  5. The requirement of minimum number of directors will not apply to Non-Profit Companies and therefore requirement of passing of special resolution to have more than prescribed number of directors will not be required.5
  6. The limit on the number of directorships6 a person can hold will not be applicable to directorships in Non-Profit Companies.
  7. Section 160 of the Companies Act on the right of persons other than retiring directors to stand for directorships will not apply to those Non-Profit Companies whose articles provide for election of directors by ballot.
  8. Disclosure of interest by a director in every contract or arrangement or proposed contract or arrangement as per section 184(2) of the Companies Act and register of contract or arrangement in which directors are interested to be kept by a company as per section 189 of the Companies Act will apply to Non-Profit Companies only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds INR 100,000.
  9. Provisions related to 'independent directors' will not be applicable to Non-Profit Companies. This includes provisions related to requirement of independent directors7; appointment of independent directors8; manner of selection of independent directors and maintenance of data bank of independent directors9.
  10. The requirement under section 177(2) of the Companies Act for an audit committee to have independent directors forming a majority will not be applicable to Non-Profit Companies.
  11. For Non-Profit Companies, a proviso will be inserted in relation to Annual General Meeting10 that the time, date and place of each annual general meeting are decided before-hand by the board of directors of the company having regard to the directions, if any, given in this regard by such company in its general meeting.
  12. Section 118 of the Companies Act for minutes of proceedings of general meeting, meeting of board of directors and other meeting and resolutions passed by postal ballot will not apply to Non-Profit Companies as a whole except that the minutes may be recorded within 30 days of the conclusion of every meeting in case of companies where the articles of association provide for confirmation of minutes by circulation.
  13. For Non-Profit Companies, matters referred to in Section 179(3)(d), (e) and (f) of the Companies Act which are 'to borrow monies'; 'to invest the funds of the company' and 'to grant loans or give guarantee or provide security in respect of loans' can be decided by the board of directors by circulation instead of a meeting.
  14. The requirement under section 178 of the Companies Act to constitute Nomination and Remuneration Committee and Stakeholders Relationship Committee will not be applicable to Non-Profit Companies.
  15. Definition of a 'company secretary' or 'secretary' under section 2(24) of the Companies Act will not be applicable to Non-Profit Companies.

These above mentioned relaxations for Non-Profit Companies is a positive change as these exemptions from corporate compliances may attract more such companies in India.


1 Section 2(68) and Section 2(71) of Companies Act.

2 Section 101(1) and Section 136(1) of Companies Act.

3 Section 173(1) of Companies Act.

4 Section 174(1) of Companies Act.

5 Section 149(1) and the first proviso to sub-section (1) of Companies Act.

6 Section 165(1) of Companies Act.

7 Section 149(4), (5), (6), (7), (8), (9), (10), (11), (12)(i) and (13) of Companies Act.

8 Proviso to Section 152(5) of Companies Act.

9 Section 150 of Companies Act.

10 Section 96(2) of Companies Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions