If a Section 8 Company fails to comply with the requirements under Section 8, then the central government may revoke the license issued under this act. If the affairs of the Company are found to be conducted fraudulently or they are in violation of the objects of the Company or prejudicial to public interest then, also, the license can be revoked.
In case of revocation, the Company may get wound up.
For the assets remaining after clearing debts and liabilities of the Company in question, they shall be transferred to another Section 8 Company having similar objects.
If a Company defaults in complying with any of the requirements laid down, it shall, without prejudice to any other action under the provisions of this Section, be punishable with a fine which shall not be less than Rs.10 lakh and may extend to Rs.1 crores. The Directors and every officer of the Company who is in default shall be punishable with imprisonment for a term which may extend to 3-years or with a fine not less than Rs.25,000 and may extend to Rs. 25 lakhs or both. Provided that when it is proved that the operations were conducted fraudulently, every officer in default shall be liable for action.
Any such order shall not be passed unless the Company has been given a reasonable opportunity of being heard.