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How do I convert my company to section 8?

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The term “convert a private company into a Section 8 company” refers to the process in which a limited company decides to convert its beneficial earning activities into charitable activities. Also, the term “charitable purpose” refers to art, education, charitable purpose, environment, Promotes the preservation of science, sports, research, religion, and social welfare.

In this blog, we will discuss the process or benefits of converting a private company into a Section 8 company registration.

Benefits of converting the private company to section 8 company registration

The benefits of converting section 8 company into a private company are as follows:

  • Section 8 provides an exemption from stamp duty during the registration of a company;
  • Provides privileges and benefits under the Companies Act 2013;
  • A partnership firm can easily become a member of a Section 8 company;
  • A Section 8 company cannot modify or amend its MOA (Memorandum of Association) and AOA (Articles of Association) without taking approval from  Central Government;
  • Tax deduction under sections 12A and 80G of Income Tax Act

Documents required for the conversion process

Documents required for the change process are as follows:

  • Format of MOA (Memorandum of Association);
  • Draft of AOA (Articles of Association);
  • Declaration in Form INC 14 by one of the following:
  • Advocate;
  • Practicing chartered accountant; or
  • Practicing company secretary;
  • A statement showing information about the company’s assets or liabilities (as of the date of application);
  • An audit report of an existing private company;
  • A photocopy of the board report of the existing private company;
  • A statement regarding the assessment of the proposed company’s “future expenses” and “annual income” for the next 3 financial years;
  • Details about income sources;
  • Details about items of expenditure;
  • The meeting passed a bona fide and certified copy of the board resolution to approve “company registration” under section 8 company registration by the board of directors;
  • Declaration filed in Form INC 15 by each person making an application for “conversion of a private company into a Section 8 company”;

Forms required for the process of conversion:

  • Run form
  • Form RD1
  • Form INC14
  • Form INC15
  • Form INC16
  • Form INC17
  • Form INC26

 

The process to convert the company to section 8 company:

  • Apply for name approval
  • File application under form RD1
  • Get the notice published in the newspaper
  • Insurance of the license of section 8 company registration.

Final words

In short, a Section 8 company is formed with the primary one is donated. Further, these companies enjoy all the benefits, privileges, deductions, and exemptions specified in the Companies Act 2013.

Therefore, to take advantage of such privileges, exemptions, deductions, and benefits, a private limited company decides to go for conversion.

However, the process of registering a private company into a Section 8 company is a back-breaking and lengthy task. We at Chartered Munshi as an NGO registration consultant have a team of skilled and competent professionals who will help in the process to convert Section 8 Company into a private company.

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Swaraj

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