Formation of Companies with Charitable Objects
A charitable company means a company formed with any of the following objects: -
The promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;
The company must have an intention to apply its profits, if any, or other income in promoting its objects; and it should not pay any dividend including Interim Dividend to its members,
The company registered as Section 8 company shall enjoy all the privileges and the obligations of limited companies.
A firm may be a member of the company registered under this section.
The company once registered its Memorandum and articles of the company can’t be altered. In any unfortunate circumstances the company want to alter the Memorandum and articles of Association of the company the prior permission from the central government is to be obtained.
If a company registered as a non-profit company, it is to be amalgamate only with another company registered under this section and having similar objects.
Conditions for Conversion of a Company Registered Under Section 8 into a Company of Any Other Kind
A company incorporated as section 8 company may convert to any other kind after satisfying the following conditions:
(1) A company registered under section 8 which intends to convert itself into a company of any 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 general meeting shall set out in detail the reasons for opting for such conversion including the following, namely: -
(a) the date of incorporation of the company;
(b) the principal objects of the company as set out in the memorandum of association;
(c) the reasons as to why the activities for achieving the objects of the company cannot be carried on in the current structure i.e. as a section 8 company;
(d) if the principal or main objects of the company are proposed to be altered, what would be the altered objects and the reasons for the alteration;
(e) what are the privileges or concessions currently enjoyed by the company, such as tax exemptions, approvals for receiving donations or contributions including foreign contributions, land and other immovable properties, if any, that were acquired by the company at concessional rates or prices or gratuitously and, if so, the market prices prevalent at the time of acquisition and the price that was paid by the company, details of any donations or bequests received by the company with conditions attached to their utilization etc.
(f) details of impact of the proposed conversion on the members of the company including details of any benefits that may accrue to the members as a result of the conversion.
(3) 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 No.MGT.14 along with the fee
(4) An intimation along with copy of the application with annexures as filed in Form no. INC.18 with the Regional Director shall also go to the Registrar through MCA system.
(5) A copy of the application with annexures as filed with the Regional Director shall also be filed with the Registrar.
Penalty
If a company makes any default in complying with any of the requirements laid down in section 8 of the Companies Act 2013, the company shall, without prejudice to any other action under the provisions of this section, be punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore rupees and the Directors and every officer of the company who is in default shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees
if the affairs of the company were conducted fraudulently every officer in default shall be liable for action under section 447.
Section 447
Fraud amount involving an amount of at least ten lakh rupees or one per cent. of the turnover of the company, whichever is lower – 6 Months Imprisonment may extend to 10years and fine not less than amount involved may extend to 3 times of amount involved.
If the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
If the fraud involving an amount less than ten lakh rupees or one per cent. of the turnover of the company whichever is lower, and does not involve public interest - imprisonment for a term which may extend to five years or with fine which may extend to fifty lakh rupees or with both.
Checklist for incorporation of Section 8 Company
Procedure and required documents for incorporation of sec.8 Company:
1. Name Reservation in Spice +
· Objects of the company should be the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment.
· Name will not contain the word Limited or Private Limited.
Upon Satisfaction by CRC (MCA) will reserve the name for 20 days with in such time application should be made for incorporation of sec .8 company.
The following documents are required while incorporating Section 8 Company:
For SPICE+ form– Application for Incorporation Certificate
1. Members and Directors
Minimum two members and two directors
2. DSC
DSC is required for minimum two members
If not having DSC, then requirement of DSC
i. PAN- Self Attested
ii. Adhar- Self Attested
iii. Mobile number and mail id
3. Memorandum of Association and Articles of Association
4. PAN of the subscribers to the Memorandum and Directors- self attested
5. Proof of ID and Address of the subscribers to the Memorandum.
Proof of ID- Passport, Voter ID and Driving License
Address Proof-Bank Statement and Mobile Bill- latest
6. Registered office proof
Rental Agreement for registered office if taken on lease.
If owned Director- Title Deed
NOC from the owner to use the premises as the registered office of the company.
Electricity bill of the premises, not older than last 2 months
7. Declaration under form INC 15, from all the directors
8. Declaration under Form INC 14 by the PCA, PCMA or PCS.
9. Estimated Income and Expenditure for the next 3 years in the format provided.
Upon Satisfaction by CRC (MCA) will issue the license under section 8 of the companies act, 2013.