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How Many Directors are required in a Section 8 Company

How Many Directors are required in a Section 8 Company

A Section 8 Company is a business entity whose business not to generate profits, but to make things better for the disadvantaged people of the society. It’s a Non-profit organization that is structured like a company. Therefore, directors are required to oversee the operations.

So, how many directors are required in a section 8 company? Well, it depends upon whether the company is public (can have general public as investors) or private (only members are allowed to invest).

Directors in a Section 8 Company: Private

If the Section 8 Company is a particularly close knit group, allowing only the members to hold its shares, then the company is operated as a private limited company. Thus, like a private company, the minimum number of directors required is 2.

Directors in a Section 8 Company: Public

If the Section 8 Company operates as a public company i.e. allows general public to hold its shares, then the minimum number of directors required increases. Therefore, the minimum number of directors required in a Section 8 company operating as a public company is 3.

Appointment of Directors in a Section 8 Company

There are two forms of director appointments in a section 8 company, or a company in general:

  1. Appointments at the time of incorporation: During this time, it’s the shareholders that appoint 2/3rd of the directors of the company.
  2. Appointment of directors once the section 8 company is setup: To appointment new directors in a section 8 company, following process has to be followed:
    1. Call a board meeting to appoint new director.
    2. Get the board resolution.
    3. Draft a letter of appointment.
    4. Get FIR-2 form and get it filled by the director you want to appoint.
    5. Get the ID proofs, address proofs and photo ID of the director you want to appoint.

Conclusion

Directors in a Section 8 Company are especially important because they ensure that the company’s vision never falters from helping people. The more directors you have more focused your company will be. Therefore, you always need more than one director to run such a business entity.

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