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Hello Auditor

How to handle disputes among members or directors in a Section 8 company?

1. Governing Document Framework

  • Refer to the MoA/AoA clauses on dispute resolution
  • Follow predefined quorum and voting procedures for decisions
  • Enforce conflict-of-interest policies for directors

2. Internal Resolution Mechanisms

  • Mediation by the Governing Board
  • Emergency General Meetings for member disputes
  • Written resolutions when physical meetings are unviable

3. Legal Recourse Options

  • Arbitration (if mandated in AoA)
  • NCLT intervention for deadlocks (Section 242, Companies Act)
  • ROC complaints for governance violations

4. Preventive Measures

  • Clear role definitions in policies
  • Annual conflict declarations by directors
  • Third-party audits for financial disputes

5. Membership-Related Disputes

  • Exit mechanisms for dissenting members
  • Share transfer restrictions (if applicable)
  • Forfeiture procedures for non-compliance

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