Introduction

The section 8 is very similar to section 25 of the old company act and enables the government to register any association with charitable objectives such as to promote sports, commerce, art and culture, education, research etc as a limited company, without adding the words ‘Pvt. Ltd.’ The income of the Company must be used to promote the charitable object only. The central government provides a license to all such companies and also informs them about some restrictions and conditions. In case they fail to fulfill these, the central government may also order them to wind up the company. In case fraudulent objectives of the Company are proved, legal action will be taken against all officers of the Company.

Effective Date of Section 8 of Companies Act, 2013 01-04-2014

Rule No. of the Companies (Incorporation) Rules, 2014 19, 20, 21, 22 and 23

Form No. INC-12, INC-13, INC-15, INC-16, INC-17, INC-18, INC-19, INC-20

Corresponding sections of the Companies Act, 1956: 25

Eligibility for forming Section 8 Company

A person or an association of persons intending to be registered under Section 8 of the Companies Act, 2013 as a limited company –

(a) the object must be charitable, to promote arts, science, commerce etc.

(b) intends to apply all its profit in promoting the objectives.

(c) Assures the prohibiting of the payment of dividends to any of its members

E-filing for Section 8 Company

A person or an association of persons shall make an application in Form No. INC-12 along with the fee as provided in the Companies

The Memorandum of association of the proposed company shall be in Form No. INC-13

Form INC-13 shall be accompanied by the following documents

  1. Memorandum of association and articles of association
  2. The confirmation by an advocate, a charted accountant or a company secretary that the memorandum and articles of association follow all the provisions of section 8;
  3. An approximate declaration of the annual income and expenditure of the Company for next three years mentioning the source of income and modes of expenditure.
  4. The declaration by each of the persons making the application in Form No. INC-15.
  5. The company must issue a notice within one week of sending the application and a copy of the application must be sent to the registrar and this notice shall also be published-

At least once in the vernacular newspaper of the district in which the registered office of the Company is situated and also in an English newspaper circulating in the district.

Other Points to be considered while forming Section 8 Company:-

  1. The company will have all the benefits of a private limited company
  2. A firm may be a member of the Company registered under this section.
  3. The company cannot alter its memorandum and articles of association.
  4. A Company registered under this section may convert itself into the company of any other kind only after complying with such conditions as may be prescribed.
  5. Where it is proved to the satisfaction of the Central Government that a limited Company registered under this Act or under any previous company law has been formed with any of the objects specified in clause (a) of sub-section (1) and with the restrictions and prohibitions as mentioned respectively in clauses (b) and (c) of that subsection, it may by license, allow the Company to be registered under this section subject to such conditions as the Central Government deems fit and to change its name by omitting the word “Limited”, or as the case may be, the words “Private Limited” from its name and thereupon the Registrar shall, on application, in the prescribed form, register such company under this section and all the provisions of this section shall apply to that Company.
  6. Where the license granted to a Company registered under Section 8 has been revoked, the company shall apply to the Registrar in Form No. INC-20 along with the fee to convert its status and change of name accordingly.
  7. Where a License is revoked under sub-section (6), the Central Government may, by order if it is satisfied that it is essential in the public interest, direct that the Company is wound up under this Act or amalgamated with another company registered under Section 8.

Conversion of Section 8 Company into Company of another class:-

  1. The company can be converted into another class by filling an application in form no. INC-18.
  2. Special resolution is required to be passed
  3. An explanatory statement must have the details and declarations.
  4. Publication of an advertisement in at least one vernacular and English newspaper circulating in the district where the registered office is situated.
  5. A copy of the notice published in the newspaper, shall be sent to various authorities including but not limited to Income Tax, the charity Commissioner, Chief Secretary of the State etc. intimate them that if they can make representation in respect of the said application before the Regional Director.
  6. Declaration from the Board
  7. If a company has obtained any special status, privileges etc., a no objection certificate shall be required.
  8. The Company should have filed all its financial statement and annual return up to the financial year preceding the date of the application.
  9. Certificate from Chartered Accountant, Company Secretary or Cost Accountant in practice as to compliance with all provisions of the Act and Rules.
  10. If regional director approves r application, he may ask the company to pay the original market price of the property.