Private Limited Company of charitable purpose
A limited private company is formed with an objective of promoting education in the rural areas of India and it wants to amalgamate with another limited private company whose objective is to promote charity and social welfare. Is it possible for them to amalgamate and what can be the conditions for the same?
Under Section 8(10) of Companies Act, 2013, it is stated that any limited company can amalgamate with another limited company having similar objective. Herein, the first company has the objective to promote education whereas the objective of the second company is to promote charity and welfare and to amalgamate they both need to have a similar objective. So, the main issue herein is that whether promoting education and promoting social welfare can be considered as similar objective or not.
The term social welfare is nowhere legally defined but in the case of Murlidhar Dayandeo Kesekar v Vishwanath Pandu Barde and Anr 1995 SCC Supl (2) 549, the definition given in the Encyclopedia Britannica was considered by the Supreme Court which defines social welfare as "System of laws and institutions through which a government attempts to protect and promote the economic and social welfare of its citizens are usually based on various forms of social insurance against unemployment, accident, illness and old age."
The wide meaning of the term social welfare and charity can be utilized to show that the two companies intend to work on promoting education. Any past practices of the Company working on social welfare in the area of education can be employed to show that the two companies share the same objective.
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