CONVERSION OF PRIVATE COMPANY INTO SECTION 8 COMPANY

The primary objective of the private limited company is to procure a benefit and when they believe they ought to be inescapable the benefit intention then as a rule members from the company chose to switch over completely to a Section 8 Company (NGO). In this article, we will examine bit by bit examination of the Conversion of a private limited company into a Section 8 Company.

SECTION 8 COMPANY:

The expression “Section 8 Company” signifies an NPO (Non-Profit Organization) which promotes Arts, Education, Charitable Purpose, Environment, Science, Sports, Research, Religion, and Social Welfare.

Further, the income earned by an NPO can’t be used for utilized for paying out dividends to the member of the company. Also, the equivalent ought to be utilized exclusively for the promotion of charitable objectives.

Besides, such companies need to get a certificate of section 8 company registration from the central government and are obligated to conform to the guidelines indicated by the public authority too.

 WHAT ARE THE ADVANTAGES WILL GET BY CONVERTING INTO A SECTION 8 COMPANY?

• Privilege and exemption under the provision of the Companies Act 2013
• Tax deduction under Section 12A and Section 80G of income tax to the organization’s income and the donors.
• No stamp Duty for Registration

 OBLIGATORY PREREQUISITES:

1. Company will look for the endorsement of its Shareholders/Members for Conversion by passing a Special Resolution in a properly met general meeting.
2. Company will add a detailed explanatory statement showing the purposes behind Conversion along with the notification of the general meeting.
3. Company will distribute a notification relating to the proposed Conversion on its own.
4. The Board of Directors will outfit a statement that the company will swear off straightforwardly or in a roundabout way paying or moving the income or property of the company to any individual who is or has been the company’s member or any individual who is guaranteeing through and at least one of them.
5. Company will secure a No Objection Certificate (NOC) if there should be an occurrence of any extraordinary status, honor, exclusion, benefit, or grant(s) that is profited from any power.
6. Company will get a Compliance Certificate from any practicing Chartered Accountant (CA)or Company Secretary (CS) or Cost Accountant (CWA) such that every one of the recommended states of the Demonstration and rules made thereunder relating to Conversion is complied with.
7. Company is expected to file all its budget summaries, Yearly Returns, and any remaining significant legal returns expected under the Misbehave to the monetary year preceding the accommodation of use to the Regional Director (RD).
8. In case the application for Conversion is made after the expiry of 03 months from the date of going before the monetary year, then a proclamation of the company’s monetary position properly guaranteed by a Chartered Accountant (CA) made up to a date in the span of 30 days of documenting the application will be joined with such application.

PROCEDURE FOR CONVERSION OF A PRIVATE LIMITED COMPANY INTO A SECTION 8 COMPANY:

 Application for Name Reservation –

The Promoters will apply for the name reservation of the proposed Company with the concerned ROC of the state where the proposed Company must be framed in the E-Form INC-1 with the recommended charges.

• Application for Conversion in E-form RD-1 –

Presently, an individual or relationship of people who need to Conversion over into a section 8 company will file an application under E-form RD-1 alongside recommended charges to the registrar to give a license under the Section 8 Companies act 2013.

• Notice in Newspaper for Conversion –

The Changing over Company will distribute a notification in Form INC 26 completely on its own in something like seven days from the date of an application made. The notification will be published in one vernacular paper in the important locale in which the enlisted office of the proposed company is to be arranged or is arranged and one in English paper in the region and on the sites as might be advised by the Central government;

The duplicate of the above notice published will likewise file with Registrar following the publication.

• Issue of License by Registrar –

The registrar could raise the candidate to outfit the endorsement or simultaneousness of the other Power, Administrative Body, and department of the Ministry of CG or SG.

The Registrar in the wake of thinking about the complaints, if any, got in somewhere around 30 days from the date of publication of notice and after consulting any authority, administrative body, Department of Ministry of the CG and SG, as it might conclude whether the license will or will not allow.

The license will be in form INC-16 or form INC-17. The Registrar might guide the company to embed in its reminder, or its articles, or somewhat in one or halfway in the other, such states of the license as might be determined by the Registrar.