Company & section 25 company (Business Law)

This query is : Resolved

Author : Debashis Mandal

PRO CHAT CALL

Posted On 10 July 2012 at 23:45

Respected Experts
A person wants to open a college under the ownership of a private limited co, is the co necessarily be a section 25 co or a normal private limited co can also run a college or any educational institution.
Again for funding or for providing grants the same person also want to start another section 25 company is it possiable to do so when the donee co is a private limited co with profit motive or its another sec 25 company - is there any legal problem may arrise in future?
Pls answer
Thanks
Debashis Mandal

Expert : ARUN KUMAR MAITRA

PRO CHAT CALL

Posted On 12 July 2012 at 17:22

It should be incorporated as a separte Section 25 company.Such type of company is formed for the promotion of art,science,commerce etc.It is given a license from the central govt. It enjoys lot of priviledges.Hoever,the license may be revoked by the central govt.if it violates its conditions.One such condition is that it should utilize its surplus for the promotion of its objects and cannot distribute dividend.Its objective should be service motive and not profit motive.Therfore, your existing company may provide financia assistance to it but it should not directly own college.