Formation of Company with Charitable Objects

License for New Companies

1.     Make an Application

To incorporate a company under this Section, an application shall be made in Form No. INC-12
Application shall be accompanied by the following documents:

a)     MOA & AOA of the company

b)    Declaration as given in Form No. INC-14 by an Advocate, a Chartered Accountant, a Company Secretary or Cost Accountant in practice, that the draft MOA & AOA have been drawn up in conformity with the provision of section 8 and rules made there under and all the requirements under section 8 has been complied with.

c)     An estimate of future income & expenditure of the company for next 3 years, specifying the source of income and the objects of the expenditure.

d)    A declaration by each of the person making the application in Form INC-15.

License for Existing Companies

When Central government is satisfied that a person or an association of persons proposed to be registered under this Act as a limited company –

a)     Has in its Object the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or anu such other object

b)    Intends to apply its profit in promoting its objects

c)     Prohibit the payment of dividend.

Steps to Incorporate Section 8 Company:

1.   Obtaining Directors Identification Number (DIN)

a.      Applicant to Obtain DIN if he does not have the DIN.

Checklist for Obtaining DIN:-

b.     Signed copy of PAN

c.     Signed copy of Address Proof

d.      Color Photograph

e.     Area of Occupation (Self employed, Professional, home maker, Student, Serviceman)

f.       Educational Qualification Certificate

g.     Email address

h.     Mobile number

i.       Place of birth

Note: - For Obtaining DIN applicant must have the Digital Signature.

For obtaining Digital Signature following documents are required:-

a)     Signed original application

b)    1 color photograph of the applicant

c)     Photograph should be crossed signed on the application

d)    Signed copy of PAN

e)     Signed copy of Address proof

f)      Email

g)     Mobile number
         

2.    Selecting a name

a.   The promoter under a proposed name shall make an application for Reservation of name in Form INC-1 to Registrar of Companies of the state in which registered office of company is proposed to be situated.

b.   Applicant is required to give maximum 6 alternative names to the registrar.

c.   The proposed name shall not be Identical/ similar to the name of a Company already exist.

d.   The proposed name shall not be registered in the Trade marks

e.   If the proposed name contains name of any other person than promoters or their close blood relatives then NO Objection Certificate from that other person would be required.

f.     If the proposed name includes name of the relatives then proof of relation would be required.

g.   If the promoter have 1 specific name in mind then certification from Practicing Professional is required.

3.   Memorandum in Form No INC-13

The Memorandum of association of the proposed company shall be in Form No. INC-13

4.   Make an Application

To incorporate a company under this Section, an application shall be made to Registrar in Form No. INC-12
Application shall be accompanied by the following documents:

e)     MOA & AOA of the company

f)      Declaration as given in Form No. INC-14 by an Advocate, a Chartered Accountant, a Company Secretary or Cost Accountant in practice, that the draft MOA & AOA have been drawn up in conformity with the provision of section 8 and rules made there under and all the requirements under section 8 has been complied with.

g)     An estimate of future income & expenditure of the company for next 3 years, specifying the source of income and the objects of the expenditure.

h)     A declaration by each of the person making the application in Form INC-15.

5.   Give Notice in News-paper

Within a week from the date of making the application to the Registrar of Companies, publish a notice, and a copy of the notice, shall be send forthwith to the registrar, in Form no. INC-26, an shall be published:
1. At least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the proposed company is to be situated, and circulating in that district, and
2. at least once in English language in an English newspaper circulating in that district; and
3. On the websites as may be notified by the Central Government. Copy of such notice in newspapers shall be submitted to the Registrar of Companies immediately after their publication.

6.   Approval of other authorities

The Registrar of Companies may require the applicant to furnish the approval or concurrence of any appropriate authority, regulatory body, department or Ministry of the Central or State Government(s)

7.   Registrar to decide on granting of license

The Registrar will wait for 30 days for objections, if any, of any person pursuant to notice published in newspapers. The Registrar may also consult necessary authorities and regulatory bodies.
Thereafter, the Registrar of Companies at its discretion may grant the license.

Sec 8(4) (i) a company registered under this section shall not alter the Provisions of its MOA or AOA except with the previous approval of the Central Government.

Sec 8(6) The Central Government may, by order, revoke such license granted under section 8, if:
a) the company contravenes with the requirement of section 8

b) the company contravenes the conditions subject to which license is issued; or
c) affairs of the company are conducted in a fraudulent manner or in violation of object of the company or prejudicial to the interest of the public.
Further, the Central Government may direct the company to change its status from section 8 company to either private or public limited company. And also direct it to change its name to include the word “Limited” or words “Private Limited”.
However, before making order, the Central Government shall give reasonable opportunity of being heard.
Upon receiving such an order, where the license granted to a company registered under section 8 has been revoked, the company shall intimate to the Registrar to convert its status and change of name accordingly.

Sec 8(7) On revocation of license the Central Government may, by order, if it is satisfied that it is essential in public interest, direct that the company be wound up or amalgamate with another company registered under this section having similar objects.

However, before making order, the Central Government shall give reasonable opportunity of hearing to the company.

Where the license is revoked and the Central Government is satisfied that in public interest, such company shall amalgamate with another company registered under section 8 and having similar objects, then the Central Government may order details of amalgamation like forming a single company, transfer of assets and liabilities etc. This right of the Central Government prevails even if they are contrary to other provisions of the Companies Act, 2013.

Sec 8(10) Section 8 company can amalgamate only with other section 8 company and having similar objects.

Sec 8(11) Penalty

Section 8 company who makes default in complying with the provisions of section 8 shall be punishable with fine which shall not be less than Rs. 10,00,000/- but which may extend to Rs. 1,00,00,000/-.

Further, the directors and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 3 years or fine which shall not be less than Rs. 25,000/- but may extend to Rs. 25,00,000/- or with both, imprisonment and fine.

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