Want to shutdown the Section 8/Section 25 company ? Here is the procedure
Promoters engaged in the business not for profit ideally go for registering a company under Section 8 of the Companies Act, 2013. Once a company is registered under Section 8 either as a public or private such company is free from not using the words private limited or public limited after the key word of the company. 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 company is having the license to operate as Charitable Company it is required to surrender that license by converting the company into a normal company other than a Section 8 Company. For the purpose of conversion of the company into a normal company the company is required to have the following things in order.
Checklist cum Procedure for Application to Regional Director for conversion of section 8 company into any other kind of company
| Sl. No. | Document or information required | Remarks |
| 1. | Hold a meeting of its Board of directors to consider and approve the proposal for conversion | |
| 2. | Hold general meeting and have the aforementioned special resolutions passed. | |
| 3. | The explanatory statement annexed to the notice convening the general meeting shall set out in detail the reasons for opting for such conversion including the following, namely:-
a) The date of incorporation of the company; b) The principal objects of the company as set out in the memorandum of association; c) The reasons as to why the activities for achieving the objects of the company cannot be carried on in the current structure i.e. as a section 8 company; d) If the principal or main objects of the company are proposed to be altered, what would be the altered objects and the reasons for the alteration; e) what are 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 acquired by the company at concessional rates or prices or gratuitously and, if so, the market prices prevalent at the time of acquisition and the price that was paid by the company, details of any donations or bequests received by the company with conditions attached to their utilization etc. f) Details of impact of the proposed conversion on the members of the company including details of any benefits that may accrue to the members as a result of the conversion. |
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| 4. | Notice together with a copy of the application and all attachments by registered post or hand delivery simultaneously with its publication | 1. To the Chief Commissioner of Income Tax having jurisdiction over the company
2. To the Income Tax Officer who has jurisdiction over the company 3. To the Charity Commissioner 4. To the Chief Secretary of the State in which the registered office of the company is situated 5. 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 wish to make any representation to Regional Director, it shall do so within sixty days of the receipt of the notice, after giving an opportunity to the Company. |
| 5. | Filing of Form MGT 14 with copy of resolution along with explanatory statement under Section 102 and amended copy of Articles of Association as attachment. | Within 30 days of passing of the special resolutions |
| 6. | Filing of Form GNL 1 with the Registrar | |
| 7. | Filing of Form INC 18 with the Regional Director | |
| 8. | Publication of Notice 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 at least once in English language in an English newspaper having a wide circulation in that district; and
b) On the website of the company, if any, and as may be notified or directed by the Central Government. |
Within a week from the date of submitting the application to the Regional Director |
| 9. | Declaration to the effect that no portion of the income or property of the company has been or shall be paid or transferred directly or indirectly by way of dividend or bonus or otherwise to persons 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 obtained any special status, privilege, exemption, benefit or grant(s) from any 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” must be obtained,
if required under the terms of the said special status, privilege, exemption, benefit or grant(s) from the concerned authority and filed with the Regional Director, along with the application. |
| 11. | Whether the Company have filed all its financial statements and Annual Returns up to the financial year
preceding the submission of the application to the Regional Director and all other returns required to be filed under the Act up to the date of submitting the application to the Regional Director? |
In the event the application is made after the expiry of three months from the date of preceding 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 not preceding thirty days of filing the application shall be attached. |
| 12. | Check whether a certificate from practicing Chartered Accountant or Company Secretary in practice or Cost Accountant in practice certifying that the conditions laid down in the Act and these rules relating to conversion of a company registered under section 8 into any other kind of company, have been complied with has obtained? | |
| 13. | On receipt of the approval of the Regional Director, File Form INC 20 | Within 30 days from the date of receipt of the order. |
NOTES:
Mandatory documents:
- Certified true copy of the special resolution along with a copy of the Notice convening the meeting including the explanatory statement;
- Memorandum of association;
- Articles of association;
- Certified true copy of board resolution(s) authorizing conversion;
- Certified true copy of the special resolution passed for approval for conversion into any other kind and notice convening the general meeting along with the relevant explanatory statement annexed thereto;
- Certificate from CA/CS/CWA (in practice) certifying that the conditions laid down in the Act and rules, have been complied with;
- 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;
- Copy of valuation report by a registered valuer about the market value of assets;
- Audited financial statements, the Board’s reports, annual returns and the audit reports for each of the two financial years immediately preceding the date of the application or, where the company has functioned only for one financial year, for such year;
- NOC from all the creditors is mandatory, if any;
- A declaration by the directors that the conditions, if any imposed by the Regional Director have been fully complied with.
Optional documents:
- Statement of financial position if applicable;
- Full details of fixed assets alienated if any, during the preceding three financial years;
- Written consent of the lenders is mandatory if any loan is outstanding;
- NOC from the concerned authority in case special status is mandatory when the company has obtained any special status/ privilege;
- Proof of payment of differential amount is mandatory 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;
- Details of donation/grant/benefit received since incorporation of company is mandatory if company has received any donation and/or grant/benefits from any person or authority since incorporation.
- Copy of NOC received from sectoral regulatory authority is mandatory if company is being regulated by any sectoral regulator.
Once the company is converted into a normal company then the company can go for winding up of the company as per the procedure provided under the Companies Act, 2013 or as per the Insolvency and Bankruptcy Code, 2016.
Author Bio
Can anyone please share draft special resolution with explanatory statement for conversion of section 8 company into another company by surrender of licence of section 8….. thanks in advance……………
Please keep it up of doing such a favourable writes ups regularly. it is really worth useful to many. possibly send the contact details of the author mr. prasanna. thanks.
Please share the draft documents
Good morning sir,
please resolve the doubt,Main purpose of conversion of sec 8 in to Pvt ltd is to wind up the company in that case there is no alteration of MOA & AoA w..r.to pvt Ltd Co.
can i file MGT-14 without attaching the MOA & AOA of Pvt Ltd Co??
please share the draft docs on my mail id [email protected]
please share the draft docs on my mail id [email protected]
Please share the draft documents for closure of section 8 company like resolutions etc.
Is the content of Form INC 19 right ?
(Publication of Notice in respect to conversion matter.)