WHAT IS A SOCIETY?
A Society is an association of persons united voluntarily to fulfil the need of an institution of non-commercial nature for promotion of numerous charitable activities like education, art, religion, culture, music and sport etc.
As per Section 20 of Society Registration Act, 1860, a society can be formed for any of the following Purposes:
- Grant of charitable assistance.
- Creation of military orphan funds.
- Societies established at the general presidencies of India.
- Promotion of science, literature, fine arts, instructions or diffusion of useful knowledge, diffusion of political education, foundation or maintenance of libraries, public museum and galleries of paintings, works of art, collection of natural history, mechanical and philosophical inventions, instruments, designs.
A Society can be a registered society or an unregistered society.
The power to make laws in relation to incorporation, governing of affairs or winding up of the societies are vested to state governments vide Entry No. 32 of list II of Schedule XII of Indian Constitution. In addition to this there is a Central Act called Societies registration Act, 1860. Many states have opted Societies registration Act, 1860 with some modification(s) or without modification(s) as their state act for societies registration while several states have made their specific act for society registration.
So, we can say that a Society can either be registered and governed under the provisions of Society Registration Act, 1860 or under the provisions of any other state act relating to societies.
WHAT IS A SECTION 8 COMPANY?
The Section 8 Companies are Companies registered under the Companies Act, 2013 for any one or more of the purposes of promoting fields of arts, commerce, science, research, education, sports, charity, social welfare, religion, environment protection, or any other similar objectives.
These companies apply their profits towards the furtherance of their objectives and do not pay any dividend to their members.
Section 8 Companies are duly registered companies under the provisions of Companies Act, 2013 and governed by the provisions of Company law.
CONVERSION OF SOCIETY INTO SECTION 8 COMPANY UNDER COMPANIES ACT, 2013
As per Section 366 of Companies Act, 2013, a Registered Society can be registered as a Section 8 Company under the provisions of Companies Act, 2013.
IN ORDER TO BE REGISTERED UNDER THE COMPANIES ACT, A SOCIETY SHOULD BE A REGISTERED SOCIETY
PROCEDURE FOR REGISTRATION OF A SOCIETY AS A SECTION 8 COMPANY.
The Provisions for registration of a society as a Section 8 Company is given under Part I of Chapter XXI of the Companies Act, 2013 read with Companies (Authorized to registered) Rules, 2014 and other related provisions of Companies Act and its related rules.
HERE IS THE PROCEDURE IN BRIEF FOR REGISTRATION OF A SOCIETY AS A SECTION 8 COMPANY AS PER ABOVE THE ABOVE STATED LAW.
- A registered society can be converted into section 8 company only as a company limited by guarantee.
- For the purposes of Conversion of Society into Section 8 Company, the provision of Chapter II of the Companies Act, 2013 relating to incorporation of company and matters incidental thereto shall be applicable mutatis mutandis for such registration.
IN ADDITION TO THAT
- A registered Society shall attach and provide the following documents and information to the Registrar along with Form No. URC. 1 for registration as a company limited by guarantee under section 8:
- A list showing the names, addresses and occupations of all persons, who on a day, not being more than six clear days before the day of seeking registration, were members of the society with proof of membership;
- A list showing the particulars of persons proposed as the first directors of the company, along with DIN, passport number, if any, with expiry date, residential addresses and their interests in other firms or bodies corporate along with their consent to act as directors of the company;
- A list containing the names and addresses of the members of the governing body of the society;
- A certified copy of the certificate of registration of the society;
- Written consent or No Objection Certificate from all the secured creditors of the applicant;
- Written consent from the majority of members (Not less than Three Forth) whether present in person or by proxy at a general meeting agreeing for such registration, and the resolution shall also provide for declaration of the amount of guarantee;
- An undertaking that the proposed directors shall comply with the requirements of the Indian Stamp Act, 1899 (2 of 1899) as applicable;
- A copy of the latest income tax return of the society;
- Details of the objects of the company along with a declaration from all the members that the restrictions and prohibitions as mentioned in clause (b) and clause (c) of sub-section (1) of section 8 of the Act shall be complied.
- A statement of proceedings, if any, by or against the society which are pending in any court or any other Authority shall be attached with.
- A society which has not filed the annual or other returns, statutorily required to be filed with the Registrar of Societies, shall not be eligible to apply for registration under section 366 of the Act.
- An undertaking from all the members of the society providing that in the event of registration as a Section 8 company under Part I of Chapter XXI of the Act, necessary documents or papers shall be submitted to the registering authority with which the society was earlier registered, for its dissolution.
- The list of members and directors and any other particulars relating to the company which are required to be delivered to the Registrar shall be duly verified by the declaration of any two or more proposed directors.
- Registered Society seeking registration under the Companies Act, 2013 as Section 8 Company under the provision of Part I of Chapter XXI shall publish an advertisement about registration seeking objections, if any within twenty-one clear days from the date of publication of notice and the said advertisement shall be in Form No. URC 2.Which shall be published in a newspaper in English and in any vernacular language, circulating in the district in which society is situated.
- A notice shall also be given to theRegistrar of Societies under which it was originally registered and shall require that objections, if any to be made by such concerned Registrar of Societies to the Registrar, shall be made within a period of twenty-one days from the date of such notice, failing which it shall be presumed that they have no objection and the notice shall disclose the purpose and substance of matters in relation to objections.
- where a society is about to register as a Section 8 Company (company limited by guarantee), the assent to its being so registered shall be accompanied by a resolution declaring that each member undertakes to contribute to the assets of the company, in the event of its being wound up while he is a member, or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, and of the costs, charges and expenses of winding up, and for the adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.
- A copy of the notice, as published and the copy of the notice served on Registrar of Societies along with proof of service, shall be attached with Form No. URC. 1.
- Statement of accounts, prepared not later than fifteen days preceding the date of seeking registration and certified by the Auditor together with the Audited Financial Statements of the previous year, wherever applicable shall be attached with Form No. URC. 1
- In case Society intending to register as a Section 8 Company is registered under section 12A of the Income Tax Act, 1961 for claiming exemption on its income, an intimation in this regard shall be sent to the Income- tax authorities and proof of its service shall be attached with Form No. URC.1.
PROVISIONS OF CHAPTER II OF THE COMPANIES ACT, 2013 RELATING TO INCORPORATION OF SECTION 8 COMPANY.
Where an application is made by a society for registration as a company limited by guarantee and it has been proved to the satisfaction of the Central Government that the proposed company:
- Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment 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, the Central Government may allow the Society to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited” , and thereupon the Registrar shall, on application, register such Society as a Section 8 company under this section.
- Application shall be made electronically by the Society in the Form of SPICe+ (Simplified Proforma for Incorporating company Electronically Plus) along with fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the Registrar of Companies.
The following documents shall be file along with the Form Spice+
- The memorandum (Form No. INC13) and articles of association of the proposed company;
- The declaration in Form No.INC.14 by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in practice, that the memorandum and articles of association have been drawn up in conformity with the provisions of section 8 and rules made thereunder and that all the requirements of the Act and the rules made thereunder relating to registration of the company under section 8 and matters incidental or supplemental thereto have been complied with;
- An estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure;
- The declaration by each of the persons making the application in Form No. INC.15.
- The Form DIR 2 (Consent to act as a Director of the Company) by each director.
- The Form INC 9 (Affidavit by Subscriber) by each subscriber.
- For the purpose of Registered Office:
- Proof of office address (lease deed/ Conveyance/ Rent Agreement/NOC)
- Copies of utility bills that are not older than two months
- Interest of First Directors in any other Entity.
- For the Purpose of Director Identification Number (DIN)
- Proof of Identity (Pan Card/ Voter ID/ Passport)
- Residential Status (Bank Statement/Electricity Bill)
Digital Signature Certificate is also required to sign the e forms.
Now you can understand that a registered Society can be registered as a Section 8 Company by following the Provisions given under Part I of Chapter XXI of the Companies Act, 2013 read with Companies (Authorized to registered) Rules, 2014 and other related provisions of Companies Act and its related rules.