Need urgent help regarding section 8 company
Querist :
Anonymous
(Querist) 16 May 2020
This query is : Resolved
Dear sir/mam,
We at Abhayudaan, Decided to setup an Section 8 Company to fulfill our some objectives in the field of Education and Research. But we are facing some issues or confusions, and we wants to solve out before registering Section 8 Company. We like if you can provide us a help for same. Questions are as under..
1). As currently We ( Me and My Partner ) doing job so we have Source of income. But after setting up foundation we have to work for only foundation and all of we know that as a director of any foundation we are not able to draw any salary so in such manner we do not have any source of Income. So please guide me the ways which can help us to feed our family as with Social Work. Here we wants to clarify that to solve out this scenario. we decided to seat our fathers ( Father of me and my friend) an director. And we work as an employee. so this is good or not?
2). As we know in initial face foundation will be in active for few of months due to lack of fund availability. in that scenario what legal action will be possible to take by government officials?
3). As on your experience suggest me which kind of section 8, I have to register LLP or PVT.LTD ? Here i wants to mention that currently we do not have any registered entity or any pvt.ltd company. We are just begin our journey with Section 8 Company only.
Please give me a best advice as soon as possible. Or also you can contact me with mail at founder@abhayudaan.org
Guest
(Expert) 16 May 2020
Section 8 Company comprises the following ---1) Charitable Objectives 2) No minimum Share Capital 3) Limited liability 4) Privileges -- several benefits and exemptions etc. ---
Guest
(Expert) 16 May 2020
Section 8 Companies formed either as Private Limited , LLP or Public Limited and formed with out any intention to make any Profit or to pay and Dividend.
Guest
(Expert) 16 May 2020
Your query No 1 is very much possible as proposed by you and Still meet a local good ACS -- Company Secretary and confirm please.
Guest
(Expert) 16 May 2020
Teething Period --- Initial period of doing some thing.
Guest
(Expert) 16 May 2020
Reply to your query No 2 -- Any business would have teething period in initial stage and it would be applicable for charitable Trust also. So nothing to worry about it. Still discuss with local good ACS -- Company Secretary.
Querist :
Anonymous
(Querist) 16 May 2020
Sir, Thanks for your advice, and here sir i contacted number of CS and consultants but they all are giving me different answers and m not getting any satisfied answer. And mostly i stuck with query one. If possible then help me to solve our query 1 mostly.
Raj Kumar Makkad
(Expert) 16 May 2020
1. If you do work as an employees of said company, you shall be required to resign from your current job. If you are not directors then there is no legal hurdle to be employees of the said company.
Raj Kumar Makkad
(Expert) 16 May 2020
2. Violation of the appointment can lead to the maximum action. None can anticipate so it is better to go through the relevant rules guiding your appointment. You can maximum b dismissed from your service.
Raj Kumar Makkad
(Expert) 16 May 2020
it shall be better to have section 8 company instead of LLP though ifs and buts are attached in both the situations but keeping in view your aim and object, better to opt for the section 8 Comapny.
Raj Kumar Makkad
(Expert) 16 May 2020
So far as your lastly sumitted situation is concerned, you shall to trust any one of your confidence in this matter otherwise every expert has his own mind and advice.
Querist :
Anonymous
(Querist) 16 May 2020
Thanks, Mr. N.J.S. Rajkumar Narsimba(Sir) and Mr. Rajkumar Makkad(sir), Still i'm confused!! Let me place two different scenarios
1. Let Guess , I'm a director of My foundation i recruited number of Employees under me to do some functional activities. Now here as we know there are no any restriction to pay salary to those employee but here director will not get Salary Right? So scene is that when if i resign from my current job and only run my foundation as a director then what is the possible source of Income for me? or can i continue job or not ?
2. Second Scenario is that let guess i place my father and uncle as a director of my foundation and i'll work as an employee in that foundation. so obviously i will get salary and if this is possible then i'm ready to resign from current job.
Please give an advice in such manner.
Guest
(Expert) 16 May 2020
No 1 . Either you could continue your job and serve as Honorary Director ( No Salary ) . Or Resign your present job and serve as Employee of Trust and you could get Salary from Trust.
Guest
(Expert) 16 May 2020
No 2 -- Yes it could be done.
Rajendra K Goyal
(Expert) 16 May 2020
You asked:
1). As currently We ( Me and My Partner ) doing job so we have Source of income. But after setting up foundation we have to work for only foundation and all of we know that as a director of any foundation we are not able to draw any salary so in such manner we do not have any source of Income. So please guide me the ways which can help us to feed our family as with Social Work. Here we wants to clarify that to solve out this scenario. we decided to seat our fathers ( Father of me and my friend) an director. And we work as an employee. so this is good or not?
Reply:
Your parents can become the directors, following basic documents are required:
- The Income-tax PAN;
- Any one of the Identity Proof - Voter ID, Aadhar Card, Driving License, Passport
- Any one of the Proofs of Residence (Electricity Bill,Telephone Bill, Mobile Bill, Bank Statement etc.);
- The Registered Office address proof
Rajendra K Goyal
(Expert) 16 May 2020
You asked:
2). As we know in initial face foundation will be in active for few of months due to lack of fund availability. in that scenario what legal action will be possible to take by government officials?
Reply:
Nothing can be said about any action, till any is faced in actual.
Rajendra K Goyal
(Expert) 16 May 2020
You said:
3). As on your experience suggest me which kind of section 8, I have to register LLP or PVT.LTD ? Here i wants to mention that currently we do not have any registered entity or any pvt.ltd company. We are just begin our journey with Section 8 Company only.
Reply:
Pvt. Ltd. Company is preferable, however, before proceeding, consult with local CA / lawyer dealing in Company law.
Rajendra K Goyal
(Expert) 16 May 2020
You said:
1. Let Guess , I'm a director of My foundation i recruited number of Employees under me to do some functional activities. Now here as we know there are no any restriction to pay salary to those employee but here director will not get Salary Right? So scene is that when if i resign from my current job and only run my foundation as a director then what is the possible source of Income for me? or can i continue job or not ?
Reply:
You can become an employee of the said concern. Discuss in detail with lawyer expert in Company law.
Rajendra K Goyal
(Expert) 16 May 2020
You said:
2 Second Scenario is that let guess i place my father and uncle as a director of my foundation and i'll work as an employee in that foundation. so obviously i will get salary and if this is possible then i'm ready to resign from current job.
Reply:
Can join as salaried employee of the said concern or continue with present job. Discuss in detail with your CA / lawyer expert in Company matters.
Presently, either you or your friend can resign from job.
Raj Kumar Makkad
(Expert) 16 May 2020
1. Being director, you shall have no scope for earning anything from the said company.
2. This option is very much available for you.
Everybody has suggested you in the same line and moreover, you yourself are also aware about the legl postion then wherein the scope of confusion?
T. Kalaiselvan, Advocate
(Expert) 19 May 2020
Being employed elsewhere you cannot run this firm simultaneously.
However you can hold the honorary post without any remunerate.
You can make your father as a director by complying with the legal procedures to appoint him as a director of the company.
You can become an employee of the firm to draw the desired salary in order to run your family and sustain the expenses.
