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:
- 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.
- Hold the General Meeting and pass the Special resolution for conversion.
- 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
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
CLOSURE OF SECTION-8 COMPANY
After converted into Private Limited Company or Public Limited Company as per Section 248-252 of Companies Act, 2013, Any company can apply for removal of its name from the Register of Companies maintained by ROC if company has not carrying on any business or operation for a period of two immediately preceding Financial Years.
Note: Company can apply for removal of its name from the Register of Companies maintained by ROC only after expiry of three month from the date of conversion.
