Dear Sir:
I have a two-fold query regarding Sec 25 Companies under the Companies Act of 1956 (now presented as Sec 8 Companies under the Companies Act 2013):
1. Do existing Sec 25 Companies have to re-register under Sec 8, or are they subsumed under the new law, and treated as Sec 8 Companies by extension? I ask, because the existing licenses clearly note that the company is registered under Sec 25 of the Companies Act). Do Sec 25 Companies now automatically stand converted to Sec 8 Companies – and if yes, what is the documentary evidence of this that the Company needs to produce or quote?
2. How does the changed wording regarding remuneration to members impact Sec 25 companies?
Compare Clause 6 of the Sec 25 license which says:”Noting in Clauses (3), (4) and (5) shall prevent the payment by the company in good faith, with the previous approval of the Central Government, of reasonable and proper remuneration to any of its members in return for any services (not being services of a kind which are required to be rendered by a member), actually rendered to the company;” and Clause 5 of the new Sec 8 license, which reads: “that nothing in clauses (3) and (4) shall prevent the payment by the company in good faith of prudent remuneration to any of its members in return for services (not being services of a kind which are required to be rendered by a member), actually rendered to the company.”
I especially note the crucial dropping of “with the previous approval of the Central Government” and the substitution of “reasonable and proper remuneration” by “prudent remuneration”.
Any comments would be deeply appreciated!
(5) that nothing in clauses (3) and (4) shall prevent the payment by the company in good faith of prudent remuneration to any of its members in return for any services (not being services of a kind which are required to be rendered by a member), actually rendered to the company;
Warm regards,
Ramakrishnan
—
N.Ramakrishnan
Ideosync Media Combine
H.No.1381, Sector 37
Faridabad – 121 003
Haryana – India