Formation of Company's with Charitable Objects

Section 8 of company Act 2013, states that which pertains to a established ‘for promoting commerce,science, educations, welfare, charity, art, sports, research, protection of environment or any other project similar to any on of these gives profits or other income applied for promoting the object of corporate and no dividend paid to members.

Therefore, Section 8 Company or Section 25 Company may be a company registered under the businesses Act, 2013 for charitable or not-for-profit purposes.

A Section 8 Company is analogous to a Trust or Society expect, a neighborhood 8 Company is registered under the Central Government’s Ministry of Corporate Affairs. Trusts and Societies are registered under government regulations. a neighborhood 8 company has various advantages in comparison to Trust or Society like improved recognition and better legal standing. Section 8 company has higher credibility between donors, includes government department and various stakeholders.

Formation of Companies with Charitable Objects,

(1) Where it's proved to the satisfaction of the Central Government that an individual or an association of persons proposed to be registered under this Act as a Ltd. 

(a) As pertains to a established ‘for promoting commerce, science, educations, welfare, charity, art, sports, research, protection of environment or any other project.

(b) intends to use its profits, if any, or other income in promoting its objects; and

(c) intends to ban the payment of any dividend to its members,

the Central Government may, by licence issued and on such conditions because it deems fit, allow that person or association of persons to be registered as a Ltd. under this section without the addition to its name of the word “Limited”, or because the case could also be , the words “Private Limited” , and thereupon the Registrar shall, on application, within the form, register such person or association of persons as a corporation under this section.


License Under Section 8 for brand spanking new Companies with Charitable Objects etc.-

(1) an individual or an association of persons (hereinafter mentioned during this rule as “the proposed company”), desirous of incorporating a corporation with indebtedness under sub-section (1) of section 8 without the addition to its name of the word “Limited”, or because the case could also be , the words “Private Limited”, shall make an application in Form No.INC-32(SPICe) along side the fee as provided within the Companies (Registration offices and fees) Rules, 2014 to the Registrar for a license under sub-section (1) of section 8.

(2) The MOA of proposed company shall be Form No.INC.13.

(3) the appliance under sub-rule (1) shall be amid the subsequent documents, namely:

(a) the memorandum of Association {MOA} and Article of Association {AOA}  of the proposed company;

(b) the declaration in Form No. INC.14 by accountant or Company Secretary in practice,a accountant , an advocate, that the memorandum and articles of association which are involved in conformity with provisions i.e section 8 and also rules that are made under which all wants of  Act and therefore rules made there under concerning registration of the corporate under section 8 and matters incidental or supplemental thereto are complied with;

(c) an estimate of the longer term annual income and expenditure of the corporate for next three years, specifying the sources of the income and therefore the objects of the expenditure;

(d) the declaration by each of the persons making the appliance in Form No. INC 15.

(2) the corporate registered under this section shall enjoy all the privileges and be subject to all or any the obligations of limited companies.

(3) A firm could also be a member of the corporate registered under this section.

(4) A Company registered under this section shall not change the provisions of memorandum or articles except with taking the prior approval of Government.

(ii) a corporation registered under this section may convert itself into company of the other kind only after complying with such conditions.


Conditions for Conversion of a corporation Registered Under Section 8 into a corporation of the other Kind

(1) a corporation registered under section 8 which intends to convert itself into a corporation of the other kind shall pass a special resolution at a general meeting for approving such conversion.

(2) The explanatory statement annexed to the notice convening the overall meeting shall began intimately the explanations for choosing such conversion including the subsequent , namely:-

(a) the date of incorporation of the company;

(b) the principal objects of the corporate as began within the memorandum of association;

(c) the explanations on why the activities for achieving the objects of the corporate can't be carried on within the current structure i.e. as a neighborhood 8 company;

(d) if the principal or main objects of the corporate are proposed to be altered, what would be the altered objects and therefore the reasons for the alteration;

(e) details of impact of the proposed conversion on the members of the corporate including details of any benefits which will accrue to the members as a results of the conversion.

(3) a licensed true copy of the special resolution along side a replica of the Notice convening the meeting including the explanatory statement shall be filed with the Registrar in Form No.MGT.14 along side the fee,

(4) the corporate shall file an application in Form No.INC.18 with the Regional Director with the fee along side a licensed true copy of the special resolution and a replica of the Notice convening the meeting including the explanatory statement for approval for converting itself into a corporation of the other kind and therefore the company shall also attach the proof of serving of the notice served to all or any the authorities mentioned in sub-rule (2) of rule 22. a replica of the appliance with annexures as filed with the Regional Director shall even be filed with the Registrar.

(5) Where it's proved to the satisfaction of the Central Government that a Ltd. registered under this Act or under any previous company law has been formed with any of the objects laid out in clause (a) of sub-section (1) and with the restrictions and prohibitions as mentioned respectively
                   
 In clauses (b) and (c) of that sub-section, it may, by licence, allow the corporate to be registered under this section subject to such conditions because the Central Government deems fit and to vary its name by omitting the word “Limited”, or because the case could also be , the words “Private Limited” from its name and thereupon the Registrar shall, on application, register such company under this section and every one the provisions of this section shall apply thereto company.

(6) The Central Government may, by order, revoke the licence granted to a corporation registered under this section if the corporate contravenes any of the wants of this section or any of the conditions subject to which a licence is issued or the affairs of the corporate are conducted fraudulently or during a manner violative of the objects of the corporate or prejudicial to public interest, and without prejudice to the other action against the corporate under this Act, 

 Direct the corporate to convert its status and alter its name to feature the word “Limited” or the words “Private Limited”, because the case could also be , to its name and thereupon the Registrar shall, without prejudice to any action which will be taken under sub-section (7), on application, register the corporate accordingly:

Where the licence granted to a corporation registered under section 8 has been revoked, the corporate shall apply to the Registrar in Form No. INC.20 along side the fee to convert its status and alter of name accordingly.

Provided that no such order shall be made unless the corporate is given an inexpensive opportunity of being heard:
Provided further that a replica of each such order shall tend to the Registrar.

(8) If on the completing or dissolution of a corporation registered under this section, there remains, after the satisfaction of its debts and liabilities, any asset, they'll be transferred to a different company registered under this section and having similar objects, subject to such conditions because the Tribunal may impose, or could also be sold and proceeds thereof credited.


Notified Date of Section:

(1). If, from an inspector’s report, made under section 223, it appears to the Central Government that a person has, in reference to the corporate or in reference to the other body corporate or other person whose affairs are investigated under this Chapter been guilty of any offence that he's criminally liable, the Central Government may prosecute such person for the offence and it shall be the duty of all officers and other employees of the corporate or body corporate to offer the Central Government the required assistance in reference to the prosecution.

(2) If any company or other body corporate is susceptible to be aroused under this Act 1[“or under the Insolvency and Bankruptcy Code, 2016”] and it appears to the Central Government from any such report made under section 223 that it's expedient so to try to to by reason of any such circumstances as are mentioned in section 213, the Central Government may, unless the corporate or body corporate is already being aroused by the Tribunal, cause to be presented to the Tribunal by a person authorised by the Central Government during this behalf

(a) a petition for the completing of the corporate or body corporate on the bottom that it's just and equitable that it should be wound up;

(b) an application under section 241; or

(c) both.


(3) If from any such report as aforesaid, it appears to the Central Government that proceedings ought, within the public interest, to be brought by the corporate or any body corporate whose affairs are investigated.

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