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Section 8 Company: Conversion of a Sec 8 into other models

  • August 18, 2022
  • Registrationwala
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Pass a Special Resolution for Section 8 company conversion

To convert your Section 8 company, the directors or the appointed official must arrange for a Board of Meeting. The director or the appointee must notify the Board members regarding the purpose of the meeting as a special resolution, i.e., the Conversion of Section 8 company into the proposed business model. Post-meeting, the resolution, so agreed upon by the Board Members, must contain the following details:

Section 8 company Incorporation

The passed resolution must contain the Date of Incorporation of the Section 8 Company.

Altered Objects of MoA

The passed resolution must contain the altered principal objects of the to-be-converted Company in the Memorandum of Association.

Reason for Conversion

The passed resolution must contain why achieving the Company's objectives cannot be carried out in the current business structure of Section 8 company.

Current Privileges

The passed resolution must contain the privileges as well as concessions that the Sec 8 company currently enjoys from various authorities.

Estate Details

The passed resolution must contain the details of the land and other immovable properties acquired by the Section 8 company. These properties are acquired at concessional rates from their market price.

Section 8 company Conversion Impact

The passed resolution must contain the details of the impact of the conversion on the members of the Sec 8 company.

Filing Section 8 company Conversion Application

The conversion applicant must file an online conversion application in the form INC-18 with the Regional Director of the Authority. Also, the application must contain a questionnaire which covers all the points mentioned above.

Section 8 company Conversion Advertisement

The conversion applicant must publish a notice in Form INC 19 in atleast two newspapers. In addition, the applicant must publish the advertisement within a week from the date of submitting an application to the Regional Director.

Application Recipients

The applicant must send the conversion application along with all the attachments as well as the publication via the Registered Post or in-person delivery to the following entities:

  • CIT/IT
  • Charity Commissioner
  • Chief Secretary of the State Government
  • Central or State Government Departments

Regulations by the Authority

The applicant must also observe the following regulations to the above-mentioned entities as accorded by the Authority:

  • Make representation to the Authority within 60 days of the receipt of notice
  • Submit a declaration from the Board of Directors that the applicant has or will not transfer portion of the income or property directly or indirectly by dividend, bonus, or otherwise. These transfers must not be directed to persons who are or have been members of the Sec 8 Company
  • Submit a NOC from any government authority which has given concessions or special status
  • File all the required financial statements as well as the Annual Returns to the current date
  • Submit a financial statement certified by a CA made up to 30 days after filing the application. The applicant must submit the statement if the last financial year was more than three months old 

Post-Conversion effects

  • Firstly, the newly incorporated Company must give up all claims of special status, exemptions, or privileges
  • Secondly, the newly incorporated Company must compensate the difference in the price of immovable property to the buyer
  • Also, the newly incorporated Company must accumulate profit or unutilized income of the previous Company brought forward from previous years. These profits must be set off. Also, the company must transfer the balance to IEPF Fund within 30 days of receiving the approval for the conversion.

Formalities of new Incorporation post-Conversion

  • Pass a special resolution to amend the MoA and AoA of the Company
  • File a certified copy of the approval to the Regional Director within 30 days from the application receipt date. The new incorporation must amend the copies of MoA and AoA and they must address the declaration from the Directors for acknowledgment of compliances by the RD
  • The Registrar, on receipt of the above application, will then issue the required Certificate of Incorporation

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