Private. To section 8

Conversion of Private Limited Company to Section 8 Company (NGO): Overview

The conversion of a private limited company to a Section 8 company, commonly known as a not-for-profit organization (NGO), involves a transition from a profit-oriented structure to one primarily focused on charitable or social objectives. This conversion is regulated by the Ministry of Corporate Affairs (MCA) in India and requires compliance with specific legal procedures.

Process:

• Decision to Convert: The decision to convert a private limited company to a Section 8 company is made by the shareholders, aligning with the company’s commitment to charitable or social causes.
• Board Meeting: Convene a board meeting to approve the conversion, appoint directors, and discuss the objectives of the Section 8 company.
• Name Approval: Apply for the approval of the new company name through the Ministry of Corporate Affairs (MCA).
• Drafting MOA and AOA: Draft the Memorandum of Association (MOA) and Articles of Association (AOA) suitable for a Section 8 company, emphasizing the promotion of charitable objectives.
• Obtaining DIN and DSC: Directors appointed among the shareholders must obtain Director Identification Number (DIN) and Digital Signature Certificates (DSC).
• Application for Conversion: File an application with the MCA for the conversion, accompanied by the drafted MOA and AOA.
• Issuance of License: Upon approval, the MCA issues a license for Section 8 status to the company, granting it the ability to operate as a not-for-profit organization.
• Transfer of Assets: Facilitate the seamless transfer of assets from the private limited company to the newly formed Section 8 company.
• Updating PAN and TAN: Obtain new PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) for the Section 8 company.
• Intimating Regulatory Authorities: Notify regulatory authorities, creditors, and other stakeholders about the conversion, ensuring transparency in the process.

Documents Required:

• PAN and TAN of the Section 8 Company
• Memorandum of Association (MOA) and Articles of Association (AOA)
• DIN and DSC of directors
• Application for conversion in the prescribed form
• Address proof, identity proof, and photographs of directors
• Board resolution approving the conversion
• Consent of shareholders for conversion
• Approval of the new company name

Benefits of Section 8 Company:

• Tax Exemptions: Section 8 companies enjoy tax exemptions on income generated for charitable purposes.
• Limited Liability: Directors and members have limited liability, protecting their personal assets.
• Credibility and Recognition: Section 8 status enhances credibility and provides legal recognition for charitable activities.
• Attracting Grants and Donations: Eligibility for grants and donations from government bodies, private organizations, and individuals.
• Perpetual Succession: The Section 8 company continues to exist despite changes in its membership or directorship.

Legal Requirements:

• Compliance with Companies Act: Adherence to the Companies Act and relevant regulations governing Section 8 companies.
• Charitable Objectives: The Section 8 company must operate exclusively for promoting charitable objectives.
• Utilization of Profits: Profits earned should be applied towards promoting the company’s objectives, with no distribution among members.

Why Hire Lawtech for This Service:

• Legal Expertise: Lawtech provides expert legal guidance to ensure compliance with the Companies Act and other relevant laws governing not-for-profit organizations.
• Customized Documentation: Drafting comprehensive MOA and AOA tailored to the specific charitable objectives of the Section 8 company.
• Regulatory Compliance: Ensuring adherence to all regulatory requirements, including name approval, DIN, and DSC.
• Efficient Transition: Managing the transition process efficiently to minimize disruptions to the organization’s charitable activities.
• Post-conversion Compliance: Guiding through post-conversion compliance requirements applicable to Section 8 companies.

By engaging Lawtech for the conversion of your private limited company to a Section 8 company, you benefit from professional legal support, ensuring a smooth and legally compliant transition to a not-for-profit status.