Section 8(4)(ii) provides that 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.

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:
(a) Date of incorporation of the company;

(b) The principal objects of the company as set out in the memorandum of association;

(c) 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/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/concessions currently enjoyed by the company, such as tax exemptions, approvals for receiving donations/contributions including foreign contributions, land and other immovable properties, if any, that were acquired by the company at concessional rates/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) What would be the 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.

👉 Filing of special resolution to the Registrar

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 e-Form MGT-14 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.

👉 Application to the Regional Director(RD) for approval for conversion of section 8 company into other company

The company shall file an application in e-Form INC-18 with the Regional Director with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 along with a certified true copy of the special resolution and a copy of the notice convening the meeting including the explanatory statement for approval for converting itself into a company of any other kind. A copy of the application with annexure as filed with the Regional Director shall also be filed with the Registrar(www.mca.gov.in)

👉 Publication of notice in the newspaper for conversion in other company

The company shall, within a week from the date of submitting the application to the Regional Director for converting itself into a company of any kind, publish a notice at its own expense, and a copy of the notice, as published, shall be sent forthwith to the Regional Director. The said notice shall be in Form INC-19 and shall be published:
(a) at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district;

(b) on the website of the company, if any, and as may further be notified/directed by the Central Government.

👉 Notice of conversion by company to Income Tax Department, etc. with application for objection, if any

The company shall send a copy of the notice, simultaneously with its publication, together with a copy of the application and all attachments by registered post or hand delivery, to the Chief Commissioner of Income Tax having jurisdiction over the company, Income Tax Officer who has jurisdiction over the company, the Charity Commissioner, the Chief Secretary of the State in which the registered office of the company is situated, any organisation or Department of the Central Government or State Government or other authority under whose jurisdiction the company has been operating. If any of these authorities wish to make any representation to Regional Director, it shall do so within sixty days of the receipt of the notice. Copy of the proof of servicing such notice shall also be attached with the application.

👉 Declaration by the Board of directors

The Board of directors shall give a declaration to the effect that no portion of the income or property of the company has been or shall be paid or transferred directly or indirectly by way of dividend or bonus or otherwise to persons who are or have been members of the company or to any one or more of them or to
any persons claiming through any one or more of them.

👉 Requirement for NOC

Where the company has obtained any special status, privilege, exemption, benefit or grant(s) from any authority such as Income Tax Department, Charity Commissioner or any organisation or Department of Central Government, State Government, Municipal Body or any recognized authority, a “No Objection Certificate” must be obtained, if required under the terms of the said special status, privilege, exemption, benefit or grant(s) from the concerned authority and filed with the Regional Director, along with the application.

👉 Some Other Requirements

✔ There should not be any default in filing of the returns to the RoC

✔ Requirement for providing a certificate for compliance from professional(Chartered Accountant/ Company Secretary in practice/Cost Accountant)

👉 Powers of the Regional Director for issuance of orders for conversion

The Regional Director may require the applicant to furnish the approval or concurrence of any particular authority for grant of his approval for the conversion. On receipt of the application, and on being satisfied, 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 in the facts and circumstances of each case including the following conditions:
(a) The company shall give up and shall not claim, with effect from the date its conversion takes effect, any special status, exemptions or privileges that it enjoyed by virtue of having been registered under the provisions of section 8;

(b) If the company had acquired any immovable property free of cost or at a concessional cost from any government or authority, it may be required to pay the difference between the cost at which it acquired such property and the market price of such property at the time of conversion either to the government or to the authority that provided the immovable property;

(c) Any accumulated profit or unutilized income of the company brought forward from previous years shall be first utilized to settle all outstanding statutory dues, amounts due to lenders, claims of creditors, suppliers, service providers and others including employees and lastly any loans advanced by the promoters or members or any other amounts due to them and the balance, if any, shall be transferred to the Investor Education and Protection Fund within thirty days of receiving the approval for conversion.

Before imposing the conditions or rejecting the application, the company shall be given a reasonable opportunity of being heard by the Regional Director.

👉 Post approval requirements to be complied by the Company for conversion

On receipt of the approval of the Regional Director,—
(i) The company shall convene a general meeting of its members to pass a special resolution for amending its memorandum of association and articles of association as required under the Act consequent to the conversion of the section 8 company into a company of any other kind.

(ii) The Company shall thereafter file with the Registrar:

(a) a certified copy of the approval of the Regional Director within thirty days from the date of receipt of the order in the Form INC-20 along with the fee to convert its status and change of name accordingly.
(b) Amended memorandum of association and articles of association of the company;
(c) A declaration by the directors that the conditions, if any imposed by the Regional Director have been fully complied with.

👉 Obtaining certificate for conversion of section 8 company with other company

On receipt of the documents , Registrar shall register the documents and issue the fresh Certificate of Incorporation.

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