Conversion of Section 8 Company into a Private Limited Company

Applicable Rules:

• Rule 21, 22, and 23 of the Companies (Incorporation) Rules, 2014.

Procedure for Conversion:

1. Board Meeting:

   • Hold a Board Meeting to pass a Board Resolution (BR) for the approval of conversion and to convene an Extra-ordinary General Meeting (EGM).

2. Extra-ordinary General Meeting (EGM):

   • Conduct an EGM and pass a special resolution for the conversion.
   • The explanatory statement annexed to the notice for the general meeting should include the following information:
     • Date of Incorporation of the company.
     • Principal Objects of the company as stated in the Memorandum of Association (MOA).
     • Reasons for Conversion: Why the activities for achieving the company's objects cannot be carried out as a Section 8 company.
     • Alteration of Objects: If the main objects of the company are to be altered, provide the new objects and reasons for the alteration.
     • Privileges or Concessions: List the current privileges or concessions enjoyed by the company, such as tax exemptions, approvals for receiving donations, land acquired at concessional rates, and any conditional donations received.
     • Impact on Members: Details of the impact of the proposed conversion on the members, including any benefits that may accrue as a result of the conversion.
     • Detailed Reasons for Conversion.

3. Filing e-Form MGT-14:

   • File e-form MGT-14 with the Registrar of Companies (ROC) to register the special resolution passed in the EGM.

4. Application in Form No. INC.18:

   • Submit an application in Form No. INC.18 with the Regional Director along with the prescribed fees.

5. Documents to be Attached with Form No. INC.18:

   • Licence number issued under Section 8.
   • Memorandum of Association (MOA).
   • Articles of Association (AOA).
   • Copy of Board Resolution.
   • Copy of the special resolution passed, including the notice and explanatory statement.
   • Certificate from a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant (ICWA) certifying compliance with the Act and rules.
   • Statement of assets and liabilities, certified by the auditor, as of a date not earlier than 30 days from the application date.
   • Valuation report by a registered valuer regarding the market value of assets.
   • Audited financial statements, Board’s report, annual returns, and audit reports of the preceding two financial years.
   • Statement of financial position.
   • Details of fixed assets alienated during the preceding three financial years.
   • Written consent from lenders if any loan is outstanding.
   • No objection certificate from all creditors.
   • Details of donations, grants, or benefits received since the company's incorporation.
   • Proof of serving notice to relevant authorities, including the Chief Commissioner of Income Tax, Income Tax Officer, Charity Commissioner, and Chief Secretary of the state where the registered office is located.

6. Filing of Form INC.19:

   • Publish a newspaper advertisement in one English and one vernacular newspaper within a week of submitting the application to the Regional Director in INC.18. Send a copy of the published notice to the Regional Director.

7. Amendment of MOA and AOA:

   • Hold an EGM and pass a special resolution to amend the MOA and AOA. There is no need to file MGT-14 for this amendment.

8. Filing Form INC.20:

   • File Form INC.20 within 30 days from the date of receiving the order of approval from the Regional Director.

9. Issuance of New Certificate of Incorporation:

   • The Ministry of Corporate Affairs (MCA) will issue a new certificate of incorporation, signifying the conversion of the Section 8 company into a Private Limited Company.

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Article Compiled by:-

Neel Lakhtariya

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or