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

The licence of Gyan Seva Foundation, a section 8 company, is revoked by the Central Government under section 8(6) after it diverted income to private use. The Government finds it essential in the public interest that the company be amalgamated, with a company of similar objects, and is also asked whether it may be merged with a trading company. Which statement is correct under section 8?

A section 8 company can amalgamate only with another section 8 company having similar objects, as section 8(10) provides. Even after licence revocation, section 8(8) contemplates amalgamation only with such a company, so a merger with a trading company is not allowed.

  1. AIt may be merged with any company if the Tribunal agrees
  2. BIt may be amalgamated with any public company by special resolution
  3. CIt cannot be amalgamated with any company, only wound up
  4. DA section 8 company can amalgamate only with another section 8 company having similar objectsCorrect

Explanation

Section 8(10) provides that a section 8 company shall amalgamate only with another section 8 company having similar objects. Section 8(8) also envisages amalgamation with a section 8 company of similar objects after revocation. Merger with a trading company is therefore not permitted, and amalgamation is not ruled out entirely.

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