Definition of Private Company

As per Section 2 (68) of the companies Act, 2013 Private Company means a Company which by its articles –

i. Restricts the rights to transfer its shares

ii. limits the No. of  Members to 200, except in the case of One person Company

iii. Except in case of One person Company, limits the number of its members to 200

Definition of Section 8 Company

Companies with Charitable Objects etc,

i. The Objects of the company is –the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment

ii. or any such other object; intends to apply its profits, if any, or other income in promoting its objects; and intends to prohibit the payment of any dividend to its members.

Section 8 Company, Conversion into and Private Company

Conditions to be fulfilled for conversion of Section 8 Company into Private Company

Rule-21 of the Companies (Incorporation) Rules, 2014

1 Special Resolution If section 8 Company want to convert itself into a Private Company shall pass a Special resolution at general meeting for approving such conversion.
2. Notice along with explanatory statements Notice along with explanatory statements shall set out in details the reasons for going for such conversion.

The reason includes the followings-

1. The date on which the Company was incorporated

2. The main object of the company as mentioned in the MOA.

3. Reasons why it cannot carried on in the current situation.

4. Altered object and reason of alteration of main object of the company, if company proposed to altered it object.

5. What are benefits currently enjoyed by the Company such as tax exemptions, approval for donations etc.

6. details of impact of the proposed conversion on the members of the company including details of any benefits that may accrues to members upon such conversion

3. Form MGT-14 to ROC A CTC of the SR along with a copy of notice  shall be filed with the registrar in form MGT-14 along with the fees.
4. Application to RD An application in Form INC 18 shall be filed by the company with regional director along with such fees as  may be prescribed
Attachments to the applications Following documents shall be attached along with the Application-

1. A Certified Copy of the resolution,

2. A Copy of the notice convening the meeting including explanatory statements,

3. Proof of service the Notice with the Authorities

5 Application to ROC A copy of the Application shall also be filed with the Registrar
6 Newspaper advertisement After filling application to RD , Company shall publish a notice at its own expenses,  a copy of notice shall also be sent to RD.

The Notice shall be in form INC-19 and it shall be published In the vernacular newspaper in the vernacular language of the district in which the registered office of the company is situated and at least once in English newspaper in district in which the registered office of the Company is situated and having nationwide wide circulation.

7 Notice to Authorities Company shall circulate a notice along with application by registered post or by hand  delivery –

i. Chief commissioner of income tax having jurisdiction over the Company

ii. Income tax officer

iii. Charity Commissioner

iv. Chief secretary of the state in which registered office of the  company is situated.

v. Any office of CG, SG having jurisdiction over the Company.

If these authorities wish to make representation to RD, it shall do so with a period of 60 days of receipt of notice.

8 Declaration by Directors The BODs shall give a declaration to the effects that they have not transferred any part of the Income or property of the Company by way dividend or bonus or otherwise to persons who are or have been members of the or to any one or more them or to any persons claiming through any one or more of them.
9. No objection certificate in special cases In case where the company has obtained any special status, privilege, exemption, benefit or grant(s) from any authority or from Govt, 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
10 Financial statements & other returns shall be filled with ROC The company should have filed all its financial statements and Annual Returns upto 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 and 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.
11. Certificate from the professional Company shall attached with the application a certificate from Practicing CA, PCS, or Cost Accountant in practice which certifying that the conditions laid downs in the Act and these rule has been complied with.
12. Concurrence of other authorities The RD may require the company to furnish the approval or Concurrence of any particular authority for its approval.
Report from ROC RD shall also obtained the report from the ROC for such
13 Issue order by RD On receipt of application and on being satisfied, the RD shall pass the order of Conversion
14 Conditions for order i. Giving up all the privileges, benefits, Donation, grants, Special Status that enjoyed by it by virtue of having been registered under the Section  8 of Companies Act, 2013

ii. Required to pay the difference of the price between the cost at which property has acquire by company at concessional rate from any authority or Govt and market price of the property at the time of the Conversion

iii.  any accumulated profit or unutilised income of the company brought forward from previous years shall be first utilized to settle all outstanding statutory dues, amounts due to lenders claims of creditors, suppliers, service providers and others including employees and lastly any loans advanced by the promoters or members or any other amounts due to them and the balance, if any, shall be transferred to the Investor Education and Protection Fund within thirty days of receiving the approval for conversion;

15 Reasonable opportunity by RD Before imposing any conditions or rejecting the application the RD shall give a reasonable opportunity of being heard to the Company
  What to do after approval?
16 Passing of Special resolution A general meeting shall be called to pass special resolution for altering it MOA
17 Filling of documents with ROC The Company shall filed to ROC-

1. A CTC of order of RD with 30 days from its receipt in form INC-20

2. Altered MOA

3. Declaration by directors

18 Fresh Certificate of Incorporation On receipt of documents the ROC shall issue the fresh certificate of incorporation.

Author Bio

More Under Company Law

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

October 2020
M T W T F S S
 1234
567891011
12131415161718
19202122232425
262728293031