Press Club faces Companies Act hurdle

These are election days in the Press Club of India (PCI), an age-old body of journalists in Delhi. But, enthusiasm has somewhat waned, at least among candidates.

The new Companies Act, 2013, has made it mandatory for those contesting elections in PCI to deposit Rs 1 lakh in cash, cheque or demand draft.

This has made many willing candidates withdraw from the race. Of the two panels running for elections, one could gather only 13 candidates out of a total 21 posts in PCI. Elections will be held on May 30. PCI is a Section 8 company which means non-profit associations registered as companies with the objective of promoting commerce, art, science, sports, education, research, social welfare etc.

Earlier, it was a Section 25 company under the old Companies Act of 1956, which also meant non-profit associations. These companies were exempted from mandatory fee for contesting elections for directorship of the companies, that time pegged at only Rs 500.

But, now no such exemptions were made for section 8 companies and candidates have to deposit Rs 1 lakh in order to be in the fray, though refundable later. It is also to be noted that the section 160 of the new Act is silent on what will happen to refunding of the mandatory fee, if the candidate fails to get 25 per cent of votes.

According to a clarification by the ministry of corporate affairs, the issue is to be tackled by the board of the particular organisation.

The new Act came into force on April one, 2014. But, PCI had elections in March last year, so it was saved from the new requirements. PCI has shot off a letter to corporate affairs minister Arun Jaitley, requesting him to exempt those contesting elections in section 8 companies from this mandatory fees.

"It is kindly prayed that necessary directions, notifications, clarifications on applicability of the provisions of section 160 of the companies Act, 2013, on section 8 companies be issued and such companies be exempted from the applicability of section 160 of the Companies Act, 2013, in the line of earlier Section 25 Companies...," the letter says.

PCI members later met the minister as well. According to sources, Jaitley assured PCI members of government amending the clause in the new Companies Act. However, nothing could be done unless the amended clause is passed by Parliament.