Can Private Limited Company convert into Section 8 company

What is a Section-8 Company?

According to the Companies Act 2013, Section 8 Company means a legal entity that is formed as a Non-Government or Non-Profit Organizations with the main object of to promote non-profit objectives such as commerce, trade, arts, education, charity, research, religion, environment protection, sports, social welfare, etc. The profits or incomes of the company can be used only for the purpose of promoting the objectives of the company and not distributed as dividends to its shareholders. These companies were earlier defined under Section 25 of Companies Act, 1956.

According to Section 8(2) of the Companies Act, 2013, Section 8 Company shall enjoy all the privileges and benefits and shall be subject to all the obligations of the Limited Company.

A Private limited company can also convert themselves into Section-8 Company to take the benefits of Section-8 companies.

The benefits of Conversion of Private Co. into Section 8 Company

1.            No stamp Duty for Registration.

2.            Section-8 Company can avail of some privileges and exemptions under the Companies Act, 2013.

3.            A firm can also be a member of Section 8 Company.

4.            Tax deduction under Section 12A and Section 80G of income tax to the organization’s income and to the donors.

Stepwise process for Conversion of Private Company into Section 8 Company.

If a company wants to convert itself to section 8 company then has to seek approval from its existing member in by way of passing a special resolution in the meeting of the members.

1.            The company needs to file Form MGT-14 within 30 days from the date of the special resolution to the registrar of the company.

2.            The company needs to file RUN form (Reserve Unique Name) with the MCA department.

3.      To file an application in form RD-1 for seeking the approval for conversion of private limited to section 8 along with the form INC-12 for granting a license under section 8                 company, accompanied by the following documents:

1. Draft of MOA and AOA for proposed Section 8 Company.
2. Declaration by Advocate, Chartered Accountant, or Company Secretary in practice as per INC-14.
3. The financial statements, the Board’s Reports & the audit reports relating to the existing company (of 3 yrs preceding the date of application).
4. Copy of estimation of future expenditure and annual income of the proposed Company for the next 3 years.
5. The sources of income and the objects of expenditure should be mentioned.
6. The certified true copy of the resolution passed by the Board in the meeting approving the Company Registration under Section 8 Company.
7. Declaration of each person making an application for the Conversion of Private Company into Section 8 Company as per INC-15.
8. The company shall publish a notice in Form No. INC 26 within a week from the date of making the application and a copy of the said notice shall be sent forthwith to the Registrar of Companies,
9. The license shall be in Form No. INC. 17 or Form No. INC 16, as the case may be, and the Registrar shall have the power to include in the license such other conditions as may be deemed necessary by him.