Like us!
Follow us!
Recommend us!
whatsapp us!
Mail us!
subscribe us!
CONVERSION OF SECTION 8 COMPANY INTO PRIVATE LIMITED COMPANY
CONVERSION OF SECTION 8 COMPANY INTO PRIVATE LIMITED COMPANY

CONVERSION OF SECTION 8 COMPANY INTO PRIVATE LIMITED COMPANY

SECTION 8 COMPANIES:


Section 8 company is a company which registered as a Non-Profit Organization. The objective of these companies is to promote the fields of arts, commerce, science, research, education, sports, charity, social welfare, environment protection and other similar activities.
A non-profit organization can be registered under the Registrar of societies or as a Non-profit making organization under the Section 8 Company of the Company Act, 2013.
These companies use their all income or profit towards the furtherance of their objectives and did not distribute as dividend amongst its shareholders.

PRIVATE LIMITED COMPANY:


Section 2(68) of the companies act, 2013 state that a “Private company” means a company which,

  1. Restricts the right to transfer its shares;

  2. limits the number of its members to two hundred;

  3. Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member.

REQUIREMENT TO FULFILL FOR CONVERSION OF SEC 8 COMPANIES INTO PRIVATE COMPANY


To convert a section 8 company into private limited company one need to fulfill the following requirements:

  1. The Company should pass a Special Resolution in its General Meeting for the Conversion of Section 8 Company into Private Company.

  2. The Notice of the General Meeting should be sent along with the attached Explanatory Statement, which should contain:

    • Incorporation date of the Company

    • The main objects mentioned in the Memorandum of Association (MOA) of the proposed Company

    • The reason because of which the current formation of the Company is not able to achieve its main object

    • If the main objects of the Company are proposed to be modify then what would be the modified objects and the reason for such modification of objects

    • The details of the effect of Conversion on the members of the Company

    • The details of the benefits that may accumulate to the members of the Company after the Conversion of Section 8 Company into Private Company

    • List of entitlement and privilege which are currently enjoyed by Section 8 Company

    • The privilege and concessions include the tax exemptions, receiving donations, foreign contributions, land or any other immovable properties

    • The details of the market price of the property obtain by the Company and the compromising rate given by the Company of such property

    • The Details of donations and inheritance received by the Company

  3. The company has to file the special resolution passed by the company in general meeting with the registrar of company within the 30 days from the date of passing of the special resolution.

  4. A company should obtain a No Objection Certificate from all authorities such as Charity Commissioner, Central or State government department, IT Department, Municipal body or any other recognized authority, in case it has gain its special status, privilege, benefit, exemption or grant from any of them.

  5. The existing Section 8 Company must file an application to the Regional Director along with a copy to Registrar of Companies for its conversion to Private Limited Company along with following documents:-

    • A certified true copy of the resolution passed in the general meeting;

    • The copy of the notice of the general meeting with the explanatory statement;

    Proof of serving the notice to all the authorities mentioned below:

    • Chief Commissioner of Income Tax Authority having jurisdiction over the company;

    • Income Tax Officer;

    • Charity Commissioner;

    • Chief Secretary of the state where the registered office of the company is situated;

    • To the authority under whose jurisdiction the company is operating.

  6. A Declaration should be given by the Board of Directors to the effect that no part of property or income of the Company has been directly or indirectly transferred or paid by way of bonus or dividend to persons or members of the Company or claiming through any one or more of them.

  7. Along with the application, the Company should also attach a Certificate from a Practicing CA/CS/CMA certifying that all the conditions relating to the conversion of Section 8 Company as legislated in the Act has been duly complied with.

  8. The company should file all its Financial Statements, Annual Returns, and all such Returns as required by the Act up to the previous year of making the application to the Regional Director. In case, an application is filed and 3 months have expired from the preceding date of Financial year to which financial statement has been filed, then, a statement of financial position duly approved by the Chartered Accountant up to the date of not preceding 30 days of submitting the application needs to be attached.

  9. The company should publish a notice in the newspaper of the district where the registered office of the company is situated in vernacular language and one in the English newspaper having a wide circulation and also on the website of the company if any;

  10. The applicant should file a copy of such notices to the Regional Director, immediately after the publication of the notice.

  11. After the approval from the Regional Director, the Company should hold a General Meeting for the modification of Memorandum of Association (MOA) and the Articles of Association (AOA) for the Conversion. The Company after the General Meeting should file with the Registrar of Companies:

    1. The true certified copy of the approval of the Regional Director within 30 days of receiving of approval in Form INC-20 with the prescribed fees.

    2. The modified Memorandum of Association (MOA) and Articles of Association (AOA) of the Company.

    3. The declaration by the Directors that the conditions if any imposed by the Regional Directors are duly complied with.

PROCEDURE FOR CONVERSION OF SEC 8 COMPANIES INTO PRIVATE COMPANY

  • Pass Special Resolution in General Meeting

    The Company should pass a special resolution in the General Meeting of its members for the approval of Conversion. The true certified copy of the Special Resolution along with the Explanatory Statement should be filed to the Registrar of Companies. The copy of the Special Resolution along with the Notice to assemble General Meeting should be filed in Form MGT-14 within 30 days of passing of the Special Resolution.

  • Application to Regional Director

    As per Rule 21 of the Companies (Incorporation) Rules, 2014, the Company should file an application with the Regional Director. The application should be filed in Form INC-18 with the prescribed fee.

  • Newspaper Advertisement

    After submitting an application to the Regional Director, the Company should publish a notice in the newspaper of the district where the registered office of the company is situated in vernacular language and one in the English newspaper for the Conversion of Section 8 Company into Private Limited Company. The publication in the newspaper should be done within a week from the date of submitting an application to the Regional Director. The Copy of the Notice published should be sent to the Regional Director in Form INC-19.

  • New Incorporation Certificate

    After receiving the required documents, the Registrar of Companies will Issue the Incorporation Certificate to the applicant. When the license of Company as Section 8 Company is revoked, the Company can apply for the Conversion of its status and name with the Registrar of Companies in Form INC-20.