CONVERSION OF SECTION 8 COMPANY INTO PRIVATE LIMITED COMPANY

 Section 8 Company as per the Companies Act, 2013 or Section 25 Company as per Companies Act, 1956 is the company which is termed as non-profit making company having the objective of promoting culture, arts, religion, science, technology etc. in the society. A Section 8 Company is prohibited from distributing any profits to its members in the form of dividends etc., as its very nature describes as a non-profit making company. 

Further, A Section 8 Company (non-profit making company) can be converted into any other kind of company i.e. public company or private company. 

 

PROCESS FOR CONVERSION: 

1.    Hold the Board Meeting for approving the conversion of Section 8 Company into Private Company or Public Company and for giving the following approvals:

·      Calling of General meeting for taking shareholders approval for conversion. 

·      to authorize one or more directors to do all acts, sign documents for conversion of Section 8 Company into company of any other kind. 

2.    Hold the General Meeting and pass the Special resolution for conversion. 

3.    After taking approval of shareholders, send the notice to the creditors/ lenders along with the following statutory authorities for seeking of approval or objections as the case may be: 

·      Chief Commissioner of Income Tax

·      Income Tax Officer

·      Registrar of Companies

·      Chief Secretary of the State

4.    File an application to regional director for conversion of Section 8 Company into company of any other kind in Form INC-18. 

Attachments to Form INC-18

·      Copy of MOA and AOA

·      Copy of Board Resolution

·      Copy of Special Resolution along with the Notice and Explanatory Statement. 

·      Certificate from PCA/ PCS/ Practicing ICWA certifying that the conditions laid down in the Acts and Rules, have been complied with. 

·      Statement of Assets and Liabilities

·      Proof of serving the Notice to the authorities mentioned above. 

·      Valuation Report by registered valuer mentioning the market value of the assets 

·      The Audited Financial Statements of the preceding two financial years or one financial year as the case may be. 

·      Details of assets sold during the preceding three financial years, if any. 

·      Consent of all the lenders/ creditors of the company

·      Declaration from the director that no portion of property has been transferred to any member by way of dividends etc.

5.    Publish the notice for conversion in Form INC-19 within 7 days of filling Form INC-18 with the Regional Director once in vernacular newspaper having vide circulation in the district in which the registered office of the company is situated and once in English Language having wide circulation in the district.   Also send the copies of newspapers to Regional Director (RD) along with the Chief Commissioner of Income Tax, Income Tax Officer, Registrar of Companies (ROCs) and Chief Secretary of the State. 

6.    On approval of Application filed in Form INC-18 by RD, hold the General Meeting giving in 21days notice to the shareholders, to amend the MOA and AOA of the Company. 

7.    File form MGT-14 within 30 days of passing special resolution attaching Altered MOA and AOA, copy of special resolution passed along with the notice and explanatory statement. 

8.    File form INC-20 for giving intimation to ROC for Revocation or Surrender of license issued under Section 8, attaching the approval for conversion given by RD, Altered MOA and AOA along with the declaration given by board in this behalf, if any. 

9.    After proper scrutiny of the documents submitted, the concerned ROC shall approve the application for surrender of license issued under Section 8 and issue fresh Certificate of Incorporation (COI) to the converted Private Limited Company or Public Limited Company.  

 

 

Comments

  1. DEEPIKAAugust 12, 2021 at 11:06 PM

    Thanks for liking the article!! Will try to provide you with more information through this blog.

    ReplyDelete
  2. TaxlegitAugust 27, 2021 at 3:52 PM

    Get your private limited company registration in 7 days
    Private Limited Company

    ReplyDelete
  3. zasma yasmin dawoodSeptember 14, 2021 at 4:55 PM

    Informative Post. Keep Sharing. For Section 8 company incorporation please click here: post incorporation compliance of section 8 companies

    ReplyDelete
    Replies
    1. DEEPIKASeptember 15, 2021 at 10:21 PM

      Thank you so much for appreciating the article.

      Delete
  4. AnonymousJune 29, 2022 at 1:57 PM

    A section 8 company is a company that has been registered under the Companies Act, 2013 and which is a not-for-profit organization. The main purpose of a section 8 company is to promote art, science, commerce, or any other charitable object. This type of company must have at least seven members, and its affairs are managed by a board of directors. Thank you for the valuable blog. It is very helpful. To know more visit: Sec 8 Company

    ReplyDelete
  5. riya somaniOctober 12, 2022 at 4:04 PM

    This is a very informative blog about corporate compliance management Thanks for sharing such a helpful post. Keep Posting!!

    ReplyDelete

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