Introduction: Understanding the Conversion of a Section 8 Company into a Private Limited Company is crucial for organizations aiming for a change in structure. In this article, we will delve into the meaning of a Section 8 Company and the comprehensive process of its conversion.
Let us understand the meaning of Section 8 Company: –
♦ Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company—
then CG may allow that person or association of persons to be registered as a section 8 company.
Further Section 8 (4)(ii) of Companies Act 2013 provides for section 8 companies to convert itself into company of any kind.
To convert a section 8 company into private limited company, the provision of rule 21, 22, 23 of Companies (Incorporation) Rules, 2014 has to be complied with.
Following is the step-by-step Procedure: –
1. Company should pass the Board resolution for conversion of section 8 company to private company in the duly convened meeting in accordance with the section 173 of Companies Act 2013
2. Company should pass a Special Resolution in its General Meeting for the Conversion of Section 8 Company into Private Company.
The Notice of the General Meeting should be sent along with Explanatory Statement. The Explanatory Statement should include:
3. The company has to file with the ROC the certified true copy of the special resolution in form MGT-14within 30 days from the date of passing of the special resolution
4. A company must intimate and obtain a “No Objection Certificate”, from authorities such as IT Department, Charity Commissioner, Central or State government department, Municipal body or any other recognized authority, in case it has obtained 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 in FormINC- 18 along with a copy to Registrar of Companies for its conversion to any other kind of Company along with following documents: –
6. A Declaration shall 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 shall also need to attach a Certificate from a Practicing CA/CS/CMA certifying that all the conditions relating to the conversion of Section 8 company as laid down in the Act has been duly complied with.
8. The company shall 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.
9. 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.
10. The company shall publish 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;
11. The applicant shall file a copy of such notices to the Regional Director, in Form INC- 19immediately after the publication of the notice.
Liasoning with Regional Director
12. After the approval from the Regional Director, the Company should hold a General Meeting for the alteration of Memorandum of Association (MoA) and the Articles of Association (AoA) for the Conversion.
13. The Company after the General Meeting shall file with the Registrar of Companies:
Conclusion: In conclusion, the conversion of a Section 8 Company into a Private Limited Company involves a meticulous process encompassing legal formalities, compliance, and thorough documentation. Organizations must navigate each step with precision to ensure a seamless transition.