CLOSURE OF SECTION 8 COMPANY

Once a company is registered under Section 8 as a public or as a private company such companies are don’t necessarily have to use the words private limited or public limited as a suffix of the company name. A partnership firm can also become a member of Section 8 Company. These companies often find it difficult to shut down the company as this section 8 companies have to surrender the license which is acquire by them to operate as a Charitable Company, to surrender the license they have to convert the company into any other form of company other than a Section 8 Company. Then only section 8 companies can close itself down.

1. Certified true copy of the special resolution along with a copy of the Notice of conducting the meeting including the explanatory statement;

2. Memorandum of Association (MOA) of the company

3. Articles of Association (AOA) of the company

4. Certified true copy of board resolution authorizing the conversion of company

5. Certified true copy of the special resolution passed for approval for conversion into any other form of company and notice convening the general meeting along with the relevant explanatory statement annexed

6. Certificate from CA/CS/CWA in practice, declaring that the conditions state in the Act and rules, have been complied with

7. Statement of assets and liabilities of the company as on the date not earlier than thirty days of that date duly certified by the auditor

8. Copy of valuation report by a registered valuing about the market value of assets;

9. Audited financial statements, the Board’s reports, annual returns and the audit reports for last two financial years immediately after the date of the application or, where the company has functioned only for one financial year

10. NOC from all the creditors, if any

11. A declaration by the directors that all the conditions imposed by the Regional Director have been fully complied with

1. Statement of financial position of the company, if applicable

2. Details of fixed assets alienated if any, during the last three financial years

3. Written consent of the lenders is necessary if there is any outstanding loan

4. NOC from the concerned authority is mandatory if the company has obtained any special status or privilege

5. Proof of payment of differential amount is necessary if the company has acquired any immovable property through lease or otherwise from any Government or authority or body corporate or person since incorporation at concessional rate or free of cost

6. Details of donation or grant or benefit received by the company since its incorporation is mandatory to submit

7. Copy of NOC received from regulatory authority is mandatory if company is being regulated by any jurisdictional regulator

1. Hold a meeting of its Board of directors to get their consent for the proposal of conversion of the company

2. Conduct the general meeting and pass the special resolutions for converting the company

3. The explanatory statement annexed to the notice convening the general meeting should contain the detail of the reasons for opting such conversion including the following:-

   • a) The date of incorporation of the company

   • b) The principal objects of the company as mentioned in the memorandum of association

   • c) The reasons why the objects of the company cannot be carried on in the current business structure i.e. as a section 8 company

   • d) If the principal or main objects of the company are proposed to be altered, then the altered objects and the reasons for the alteration should be provided

   • e) Details of the privileges or concessions currently enjoyed by the company, such as tax exemptions, approvals for receiving donations or contributions including foreign contributions, land and other immovable properties, if any, that were in the possession of the company at concessional rates or prices or gratuitously and, if so, the market prices at the time of acquisition and the price that was paid by the company, details of any donations or inheritance received by the company with conditions attached to their utilization etc.

   • f) Details of impact of the company conversion on the members of the company including details of any benefits that may accrue to the members as a result of the conversion.

4. Notice along with a copy of the application and all attachments by registered post or deliver simultaneously with its publication, to:

   • I. To the Chief Commissioner of Income Tax having jurisdiction over the company

   • II. To the Income Tax Officer who has jurisdiction over the company

   • III. To the Charity Commissioner

   • IV. To the Chief Secretary of the State in which the registered office of the company is located

   • V. To any organization or Department of the Central Government or State Government or other authority under whose jurisdiction the company has been operating and if any of these authorities want to make any representation to Regional Director, it should do so within the sixty days of the receipt of the notice, after giving an opportunity to the Company.

5. Filing of Form MGT 14 along with the copy of resolution and explanatory statement under Section 102 and amended copy of Articles of Association as attachment in the forms, within the 30 days of passing of the special resolutions.

6. Filing of Form GNL 1 with the Registrar of Companies

7. Filing of Form INC 18 with the Regional Director

8. Publication of Notice Within a week from the date of submitting the application to the Regional Director and the said notice shall be in Form INC 19 in:

   • a) at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and once in English language in an English newspaper having a wide circulation in that district; and

   • b) On the official website of the company, if any, and as may be notified or directed by the Central Government.

9. Declaration to the effect that no part of the income or property of the company has been or will be paid or transferred directly or indirectly by way of dividend or bonus or otherwise to individuals who are or have been members of the company or to any one or more of them or to any persons claiming through any one or more of them.

10. Whether the company has received any special status, privilege, exemption, benefit from any legal authority such as Income Tax Department, Charity Commissioner or any organization or Department of Central Government, State Government, Municipal Body or any recognized authority.
    If yes then a No Objection Certificate should be received, as per required under the terms of the specific special status, privilege, exemption, and benefit from the concerned authority and filed with the Regional Director, along with the application.

11. Whether the Company has filed its all financial statements and annual returns up to the financial year preceding the submission of the application to the Regional Director and all other returns needed to be filed under the Act up to the date of submitting the application to the Regional Director.
    If the application is made after the expiry of three months from the date of end of financial year to which the financial statement has been filed, a statement of the financial position duly certified by chartered accountant made up to a date within the thirty days of filing the application should be attached.

12. Check whether a certificate from practicing Chartered Accountant or Company Secretary in practice or Cost Accountant in practice has verified that the conditions laid down in the Act and these rules relating to conversion of a company registered under section 8 into any other form of company, have been complied

13. after the receipt of the approval from the Regional Director, File Form INC 20 within 30 days from the date of receipt of the order.
    Once the section 8 company is converted into any other form of company then it can go for winding up of the company as per the procedure laid down under the Companies Act, 2013 or as per the Insolvency and Bankruptcy Code, 2016.