Section 25 of Companies act 1956

Presented by: Arindam Mukherjee Harendra Verma Parag Rastogi Sanjeev Singh

What is Sec. 25 ?
Section 25 permits registration of those

associations which are ‘ associations not for profit’. Eg. Indian School of Business Some companies are not for profit but for promoting commerce, art, science, religion or for social purpose. These associations may or may not be registered as company under ‘Companies Act’.

Contd.
When such associations are registered

as company with limited liability, they may be given license by central government. A Public limited company must use word ‘limited’ at the end while a private limited company should use ‘private limited’. They do not use the word ‘limited’ or ‘private limited’.

Conditions for Granting License
üThe company to be formed as a limited company is for promoting commerce, art, science, religion or for social purpose. üThe company should apply its profits or other incomes in promoting its objects and it prohibits the payment of dividends to its members. Central govt. may also require that these conditions are inserted in ‘Memorandum’ or in ‘Articles’ or partly in both.[sec 25 (5)]

Contd.
Under certain conditions exemptions can

be made by govt. which are as:
 A general meeting of such an association may

be called by giving a notice in writing of not less than 14 days.[sec 171, notification date 9.1. 1976]  Documents under Sec. 219(1) may be sent to members not less than 14 days before the date of the meeting.  Board of directors of such companies must hold at least one meeting within every 6 months as against every 3 calendar months.
 

Legal framework
A company with license can’t alter its

objects without prior approval from govt. Any alteration can result in revoking of license by the govt. Govt. can any time revoke license. Govt. gives a notice before revoking. On revocation association loses exemptions. Then again Registrar enters the word limited or private limited whichever is applicable.

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