SECTION 8 COMPANY UNDER COMPANY LAW 2013

• SECTION  8 COMPANY UNDER COMPANY LAW 2013

SECTION 8 COMPANY

• SECTION 8 OF THE COMPANIES ACT.2013 DEALS WITH THE FORMATION OF COMPANIES WHICH ARE FORMED TO PROMOTE THE CHARITABLE OBJECTS OF :

1. COMMERCE
2. ART
3. SCIENCE
4. SPORTS
5. EDUCATION
6. RESEARCH
7. SOCIAL WELFARE
8. RELIGION
9. CHARITY
10. PROTECTION ENVIRONMENT

• SECTION 8 COMPANY

1. SUCH COMPANY INTENDS TO APPLY ITS PROFIT IN PROMOTING ITS OBJECTS AND PROHIBITING THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS
2. REGISTERED AS LIMITED COMPANY UNDER SECTION 8 OF THE COMPANIES ACT.2013
3. HOLD THE LICENCE FROM CENTRAL GOVERNMENT

• FEATURES

1. HAS IN THE OBJECT THE PROMOTION OF COMMERCE.ART.SCIENCE,SPORTS.EDUCATION.RESEARCH,SOCIAL WELFARE,RELIGION,CHARITY,PROTECTION OF ENVIRONMENT ETC
2. INTENDS TO APPLY ITS PROFITS IF ANY OR OTHER IN INCOME IN PROMOTING ITS OBJECTS AND
3. INTENDS TO PROHIBITS THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS
4. ON REGISTRATION THE COMPANY SHALL ENJOY THE SAME PRIVILEGES AND OBLIGATIONS AS OF LIMITED LIABILITY COMPANY
5. A COMPANY REGISTERED UNDER THIS SECTION SHALL NOT ALTER THE PROVISION OF ITS MEMBERS OR ARTICLES EXCEPT WITH THE PREVIOUS APPROVAL OF THE CENTRAL GOVERNMENT

    VI.            A FIRM MAY BE MEMBER OF THE COMPANY REGISTERED UNDER SECTION 8

  VII.            A COMPANY REGISTERED UNDER THIS SECTION MAY CONVERT INTO COMPANY OF ANY OTHER KIND  SHALL PASS A SPECIAL RESOLUTION AT GENERAL MEETING FOR APPROVING SUCH CONVERSION.

• PROCEDURE ( AS PER RULE 19 OF THE COMPANIES ( INCORPORATION RULES 2014)

•    THE APPLICANT HAS TO APPLY IN FORM INC 32(SPICEe)  ALONG WITH THE FEES PRESCRIBED IN COMPANIES REGISTRATION OFFICES AND FEES RULES ,2014 TO THE REGISTRAR FOR A LICENCE UNDER SUBSECTION (1) OF SECTION 8 OF THE COMPANIES ACT,2013

•    THE MEMORANDUM OF ASSOCIATION OF THE PROPOSED SECTION 8 COMPANY WITH THE CHARITABLE OBJECT SHALL BE IN FORM INC 13

•    THE DOCUMENT IS TO BE ENCLOSED WITH THE APPLICATION INCLUDE :

1. MOA AND AOA OF THE COMPANY
2. A DECLARATION IN FORM INC -14 BY ANY OF THE PRACTICING PROFESSIONAL OUT OF ADVOCATE,A CA.COST ACCOUNTANT OR CS THAT THE MOA AND AOA HAVE BEEN DRAWN UP IN THE PROVISION OF SECTION 8 AND RULES MADE THEREUNDER AND ALL THE REQUIREMENTS OF THE ACT  AND RULES MADE THEREUNDER RELATING TO REGISTRATION OF THE COMPANY UNDER SECTION AND MATTERS INCIDENTAL OR SUPPLEMENTAL HAVE BEEN COMPILED WITH
3. AN ESTIMATE THE FUTURE ANNUAL INCOME AND EXPENDITURE OF THE COMPANY FOR THE NEXT YEAR SPECIFYING THE SOURCE OF THE INCOME AND OBJECTS OF THE EXPENDITURE
4. THE DECLARATION BY EACH OF THE PERSON MAKING THE APPLICATION IN FORM INC -15

• RESTRICTIONS/PRIVILEGES FOR SECTION 8 COMPANY

1. A FIRM MAY BE MEMBER OF THE SECTION 8 COMPANY
2. A SECTION 8 COMPANY SHALL NOT ALTER THE PROVISION OF THE MEMORANDUM OR ARTICLES EXCEPT WITH THE PREVIOUS APPROVAL OF THE CENTRAL GOVERNMENT
3. A SECTION 8 COMPANY MAY CONVERT ITSELF INTO COMPANY OF ANY OTHER KIND ONLY AFTER COMPLYING WITH CONDITIONS AS PER RULES 21 OF THE COMPANIES ( INCORPORATION) RULES 2014
4. THIS SECTION ALLOWS THE CENTRAL GOVERNMENT TO REGISTER SUCH PERSON OR ASSOCIATION OF PERSONS AS A COMPANY WITH LIMITED LIABILITY WITHOUT THE ADDITION OF THE WORD LIMITED OR PRIVATE LIMITED TO ITS NAME BY ISSUING LICENCE ON SUCH CONDITIONS AS IT DEEM FIT
5. THE REGISTER SHALL ON APPLICATION REGISTER SUCH PERSON OR ASSOCIATION OF PERSONS AS A COMPANY UNDER THIS SECTION
6. A SECTION 8 COMPANY SHALL AMALGAMATE ONLY WITH ANOTHER SECTION 8 COMPANY AND HAVING SIMILAR OBJECTS

• REVOCATION OF SECTION 8 LICENSE BY THE CENTRAL GOVERNMENT

1. HAS THE POWER OF REVOCATION OF THE LICENSE GRANTED TO ANY COMPANY UNDER SECTION 8 OF THE COMPANIES ACT
2. IF THE COMPANY CONTRAVENES ANY OF THE REQUIREMENTS OF SECTION 8 OF THE COMPANIES ACT,2013
3. OR ANY OF THE CONDITIONS ON WHICH LICENSE IS ISSUES
4. THE AFFAIRS OF THE COMPANY ARE CONDUCTED FRAUDULENTLY OR IN MANNER VIOLATE THE OBJECTS OF THE COMPANY
5. PREJUDICIAL TO PUBLIC INTEREST
6. PROVIDED NO SUCH ORDER SHALL BE MADE UNLESS THE COMPANY IS GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD

• REVOCATION OF SECTION 8 LICENSE BY THE CENTRAL GOVERNMENT

1. WHERE A LICENSE IS REVOKED THE CENTRAL GOVERNMENT MAY DIRECT THAT COMPANY TO BE WOUND  UP UNDER THE COMPANIES OR AMALGAMATE WITH OTHER  SECTION 8 COMPANY AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD
2. ON THE WINDING UP OR DISSOLUTION OF SECTION 8 COMPANY
3. IF THERE REMAINS ANY ASSETS AFTER THE SATISFACTION OF ITS DEBTS AND LIABILITIES THAT MAY BE TRANSFERRED TO ANOTHER SECTION 8 COMPANY HAVING SIMILAR OBJECT AND SUBJECT TO SUCH CONDITIONS IMPOSED BY THE TRIBUNAL OR MAY BE SOLD AND PROCEEDS CREDITED TO INSOLVENCY AND BANKRUPTCY FUND FORMED UNDER SECTION 224 OF THE INSOLVENCY AND BANKRUPTCY CODE 2016

• EXCEPTION

1. CAN CALL ITS GENERAL MEETING BY GIVING A CLEAR 14 DAYS NOTICE INSTEAD OF 21 DAYS
2. REQUIREMENTS OF MINIMUM NUMBER OF DIRECTORS,INDEPENDENT DIRECTORS DOES NOT APPLY
3. NEED NOT CONSTITUTE NOMINATION AND REMUNERATION COMMITTEE AND SHAREHOLDERS RELATIONSHIP COMMITTEE

•    SUMMARY

•    FORMATION --- TO PROMOTE CHARITABLE OBJECTS

•    APPLICATION OF PROFITS :

ü     TO PROMOTE ITS OBJECTIVES

ü     NO PAYMENT OF DIVIDENDS OUT OF PROFITS

•    TYPE OF CO :

v LIMITED LIABILITY

v WITHOUT THE ADDITION OF WORDS LTD/OR PVT LTD

v HOW STATUS IS GRANTED :

•    HOW STATUS IS GRANTED :

•    THE CENTRAL GOVERNMENT CAN GRANT SUCH STATUS

•    HOWEVER CG HAS DELEGATED THE POWER TO GRANT LICENCE TO ROC

•    REVOCATION OF LICENCE :

•    CG MAY REVOKE ICENCE

ü     IF THE CONDITIONS OF SECTION 8 ARE CONTRAVENED OR

ü     AFFAIRS OF THE COMPANY ARE CONDUCTED FRAUDULENTLY OR PREJUDICIAL TO PUBLIC INTEREST

ü     EFFECT OF REVOCATION OF LICENCE : USE OF LTD/PVT LTD

• CONVERSION OF SECTION 8 COMPANY TO ANY OTHER FORM( RULE 21 ( THE COMPANIES (INCORPORATION ) RULES 2014

·         CONDITIONS :

• PASS SPECIAL RESOLUTION AT A GENERAL MEETING FOR APPROVING SUCH CONVERSION
• THE EXPLANATORY STATEMENT ANNEXED TO THE NOTICE CONVENING THE GENERAL MEETING SHALL MENTION DETAILS ALONG WITH THE REASONS FOR OPTING  SUCH CONVERSION INCLUDING THE FOLLOWING :
• DATE OF INCORPORATION OF THE COMPANY
• THE PRINCIPAL OBJECTS OF THE COMPANY AS PER THE MOA
• THE REASONS AS TO WHY THE ACTIVITIES FOR ACHIEVING THE OBJECTS CANNOT BE CARRIED UNDER SECTION 8
• CONVERSION OF SECTION 8 COMPANY TO ANY OTHER FORM( RULE 21 ( THE COMPANIES (INCORPORATION ) RULES 2014

·         CONDITIONS :

·         II.THE EXPLANATORY STATEMENT ANNEXED TO THE NOTICE CONVENING THE GENERAL MEETING SHALL MENTION DETAILS ALONG WITH THE REASONS FOR OPTING  SUCH CONVERSION INCLUDING THE FOLLOWING :

• DATE OF INCORPORATION OF THE COMPANY
• THE PRINCIPAL OBJECTS OF THE COMPANY AS PER THE MOA
• THE REASONS AS TO WHY THE ACTIVITIES FOR ACHIEVING THE OBJECTS CANNOT BE CARRIED UNDER SECTION 8
• IN CASE OF ALTERATION OF MAIN OR PRINCIPLE OBJECT ,NEW OBJECTS AND REASONS
• WHAT ARE THE PRIVILEGES OR CONCESSION CURRENTLY ENJOYED BY THE COMPANY

• CONVERSION OF SECTION 8 COMPANY TO ANY OTHER FOMR( RULE 21 ( THE COMPANIES (INCORPORATION ) RULES 2014

·         CONDITIONS :

·         DETAILS OF THE IMPACT OF THE PROPOSED CONVERSION ON THE MEMBERS OF THE COMPANY INCLUDING DETAILS OF ANY BENEFITS THAT MAY ACCRUE TO THE MEMBERS AS RESULT OF THE CONVERSION

·         A CERTIFIED TRUE COPY OF THE SPECIAL RESOLUTION ALONG WITH A COPY OF THE NOTICE CONVENING THE MEETING INCLUDING THE EXPLANATORY STATEMENT SHALL BE FILED WITH THE REGISTRAR IN FORM MGT-14 ALONG WITH FEE

·         THE COMPANY SHALL FILE AN APPLICATION IN FORM INC 18 WITH THE REGIONAL DIRECTOR WITH THE FEE ALONG WITH CERTIFIED TRUE COPY OF THE SPECIAL RESOLUTION AND A COPY OF THE NOTICE CONVENING THE MEETING INCLUDING THE EXPLANATORY STATEMENT FOR APPROVAL FOR CONVERTING INTO A COMPANY OF ANY OTHER KIND AND COMPANY SHALL ATTACH THE PROOF OF SERVING OF THE NOTICE SERVED TO ALL THE AUTHORITIES MENTIONED  IN SUB RULE (2) OF RULE 22 OF THE COMPANIES INCORPORATION RULES 2014

·         A COPY OF THE APPLICATION WITH ANNEXURES AS FILED WITH THE REGIONAL DIRECTOR SHALL ALSO BE FILED WITH THE REGISTRAR.

• OTHER CONDITIONS
• WITHIN WEEK FROM THE DATE OF SUBMITTING THE APPLICATION TO THE REGIONAL DIRECTOR
• PUBLISH A NOTICE AT ITS OWN EXPENSE AND A COPY OF THE NOTICE AS PUBLISHED SHALL BE SENT FORTHWITH TO THE REGIONAL DIRECTOR AND SAID NOTICE SHALL BE PUBLISHED IN FORM NO INC 19
• ONE IN VERNACULAR NEWSPAPER ( PRINCIPAL VERNACULAR LANGUAGE OF THE DISTRICT IN WHICH THE REGISTERED OFFICE IS SITUATED) ONE ONE IN ENGLISH
• ON THE WEBSITE IF ANY
• OTHER CONDITIONS
• THE COMPANY SHALL SEND A COPY OF THE NOTICE SIMULTANEOUSLY WITH THE PUBLICATION TOGETHER WITH A COPY OF APPLICATION AND ALL ATTACHMENT BY REGITERED POST OR HAND DELIVERY :

1. THE CHIEF COMMISSIONER OF INCOME TAX
2. INCOME TAX OFFICER
3. THE CHIEF SECRETARY OF THE STATE IN WHICH THE REGISTERED OFFICE IS SITUATED
4. ANY ORGANIZATION OR DEPARTMENT OF THE CG OR SG OR OTHER AUTHORITY UNDER  WHOSE JURISDICTION THE CO HAS BEEN OPERATING AND IF ANY OF THESE AUTHORITIES WISH TO MAKE REPRESENTATION TO RD WITHIN 60 DAYS OF THE RECEIPT OF THE NOTICE AFTER GIVING AN OPPORTUNITY TO THE COMPANY

• THE COPY OF PROOF SERVING SUCH NOTICE SHALL BE ATTACHED TO THE APPLICATION

·         DECLARATION BY BOD THAT NO PORTION OF THE INCOME OR PROPERTY HAS BEEN PAID ,TRANSFERRED DIRECTLY OR INDIRECTLY TO THE MEMBERS

·         NO OBJECTION CERTIFICATE FORM AUTHORITIES  WHERE THE COMPANY HAS OBTAINED ANY SPECIAL STATUS,PRIVILEGES,EXEMPTION,BENEFITS  FROM THE CONCERNED AUTHORITY AND FILES WITH THE REGIONAL DIRECTOR ALONG WITH APPLICATION

·         THE COMPANY SHOULD HAVE FILED ALL ITS FINANCIAL STATEMENT AND ANNUAL RETURNS UPTO THE FINANCIAL YEAR PRECEDING THE SUBMISSION TO APPLICATION TO THE REGIONAL DIRECTOR

·         IN THE EVEN APPLICATION IS MADE AFTER THE EXPIRY OF THREE MONTHS FROM THE DATE OF PRECEDING FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENT HAS BEEN FILED : STATEMENT OF FINANCIAL POSITION ( DULY CERTIFIED CA) ( TO DATE NOT PRECEDING THIRTY DAYS OF FILING THE APPLICATION SHALL BE ATTACHED

·         ALSO ATTACH A CERTIFICATE FROM PRACTICING CA/CS/COST ACCOUNTING IN PRACTICE CERTIFYING THE CONDITIONS LAID DOWN ARE COMPILED

·         THE REGIONAL DIRECTOR MAY ALSO OBTAIN THE REPORT FROM THE REGISTRAR

·         THE REGIONAL DIRECTOR SHALL ISSUE AN ORDER APPROVING THE CONVERSION OF THE COMPANY INTO A COMPANY OF ANY OTHER KIND SUBJECT TO SUCH TERMS AND CONDITIONS AS MAY BE IMPOSED

·         THE REGIONAL DIRECTOR SHALL ISSUE AN ORDER APPROVING THE CONVERSION OF THE COMPANY INTO A COMPANY OF ANY OTHER KIND SUBJECT TO SUCH TERMS AND CONDITIONS AS MAY BE IMPOSED

1. GIVE UP AND SHALL NOT CLAIM WITH EFFECT FROM THE DATE OF CONVERSION ANY SPECIAL STATUS.EXEMPTION AND PRIVILEGES
2. ACQUIRED ANY IMMOVABLE PROPERTY AT FREE OF COST OR AT CONCESSIONAL COST FORM GOVERNMENT/AUTHORITY PAY THE DIFFERENCE ( COST AND MP AT THE TIME OF CONVERSION)
3. ANY ACCUMULATED PROFIT OR UNUTILIZED INCOME : FIRST UTILIZED TO SETTLE ALL OUTSTANDING STATUTORY DUES,AMOUNT TO LENDERS/CREDITORS/SUPPLIERS/SERVICE PROVIDERS AND LASTLY TO ANY LOAN BY PROMOTERS/MEMBERS
4. BALANCE TO INVESTOR EDUCATION AND PROTECTION FUND WITH IN 30 DAYS OF RECEIVING THE  APPROVAL OF THE CONVERSION

·         ON RECIPT OF THE APPROVAL OF THE REGIONAL DIRECTOR :

·         THE COMPANY SHALL CONVENE A GENERAL MEETING OF ITS MEMBERS TO PASS SPECIAL RESOLUTION FOR AMENDING ITS MOA AND AOA

·         FILING WITH THE ROC:

1. CERTIFIED TRUE COPY OF THE APPROVAL OF THE REGIONAL DIRECTOR WITH IN 30 DAYS FROM THE DATE OF RECEIPT  OF THE ORDER IN INC 20 ALONG WITH THE FEES
2. AMENDED COPY OF MOA AND AOA
3. DECLARATION OF THE DIRECTORS : COMPLIANCE OF ALL CONDITIONS
4. THE REGISTRAR WILL ISSUE THE FRESH CERTIFICATE OF INCORPORATION