Govt approves conversion of SECI from Section 8 company to Section 3 company under the Companies Act, 2013
Updated: Jun 25, 2015 12:09:54pm
New Delhi, June 25 (KNN) The Union Cabinet, on Wednesday, gave its approval to the Solar Energy Corporation of India (SECI) to apply to the Registrar of Companies for - converting it into a Section 3 company under the Companies Act, 2013; and renaming it as the Renewable Energy Corporation of India (RECI).
After the decision, “SECI will become a self-sustaining and self-generating organization,” Cabinet said in an official statement.
The impact of the decision will be that, “SECI will engage itself in owning solar power plants generating and selling power and in other segments of solar sector activities, including manufacturing of solar products and materials; and SECI will become RECI after change of its name and then will take up development of all segments of renewable energy namely, geo-thermal, off-shore wind, tidal etc. apart from solar energy.”
Section 8 of the Companies Act, 2013 [earlier Section 25 of the Companies, Act 1956] provides for formation of companies with charitable, objects.
Under this provision, the commercial aspect of a business entity and its growth is completely prohibited. In comparison for a Section 3 company the object is not limited, and is mainly for commercial activities which will facilitate growth of the company. It therefore, means that a Section 8 company can only engage in activities of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity etc., but not commercial activity leading to trade, buying and selling etc. resulting in profit and distribution of dividend.
The Government has also decided to enlarge the scope of the activities of SECI to cover all renewable energy sources, with a view to provide a comprehensive and optimized solution for generation of renewable energy integrating various renewable energy sources.
The generation profile of solar, wind and small hydro has complementarity and generating power from these sources is likely to be more uniform. This will also reduce stress on transmission and distribution networks, resulting in better grid management. Considering this aspect, the Government has allowed the change of name from "Solar Energy Corporation of India (SECI)" to "Renewable Energy Corporation of India (RECI)", the Cabinet said. (KNN Bureau)
After the decision, “SECI will become a self-sustaining and self-generating organization,” Cabinet said in an official statement.
The impact of the decision will be that, “SECI will engage itself in owning solar power plants generating and selling power and in other segments of solar sector activities, including manufacturing of solar products and materials; and SECI will become RECI after change of its name and then will take up development of all segments of renewable energy namely, geo-thermal, off-shore wind, tidal etc. apart from solar energy.”
Section 8 of the Companies Act, 2013 [earlier Section 25 of the Companies, Act 1956] provides for formation of companies with charitable, objects.
Under this provision, the commercial aspect of a business entity and its growth is completely prohibited. In comparison for a Section 3 company the object is not limited, and is mainly for commercial activities which will facilitate growth of the company. It therefore, means that a Section 8 company can only engage in activities of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity etc., but not commercial activity leading to trade, buying and selling etc. resulting in profit and distribution of dividend.
The Government has also decided to enlarge the scope of the activities of SECI to cover all renewable energy sources, with a view to provide a comprehensive and optimized solution for generation of renewable energy integrating various renewable energy sources.
The generation profile of solar, wind and small hydro has complementarity and generating power from these sources is likely to be more uniform. This will also reduce stress on transmission and distribution networks, resulting in better grid management. Considering this aspect, the Government has allowed the change of name from "Solar Energy Corporation of India (SECI)" to "Renewable Energy Corporation of India (RECI)", the Cabinet said. (KNN Bureau)
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