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CS Executive · Company Law and Practice · Legal Status and Types of Registered Companies

The Central Government revokes the licence of Jan Seva Foundation, a section 8 company, for conducting affairs in a manner prejudicial to public interest, after giving it a hearing. It finds it essential in the public interest that the company not continue independently. Which statement is correct under section 8?

The Central Government may direct winding up or amalgamation with another section 8 company, but only after giving the company a reasonable opportunity of being heard. Amalgamation is confined to section 8 companies, so merger with an ordinary private company is not allowed.

  1. AThe company can only be wound up, never amalgamated
  2. BThe Central Government may direct that it be wound up or amalgamated with another section 8 company, after a reasonable opportunity of being heardCorrect
  3. CIt may be merged with any private limited company chosen by the Central Government
  4. DThe Registrar may order its amalgamation without hearing the company

Explanation

Under section 8(7), after revocation the Central Government may, if essential in the public interest, direct winding up or amalgamation with another section 8 company, provided the company is heard. Section 8(10) confines amalgamation to section 8 companies with similar objects, so merger with a private company is wrong.

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