A Society is formed for charitable assistance, promotion of science, literature, fine arts, foundation or maintenance of libraries, upkeep of historical buildings, museum and galleries of paintings, works of art etc.
Societies are governed by The Societies Registration Act. 1975. There are various existing government societies and government-controlled societies registered under the said Act. The Government has considered to bring uniformity in the management and governance framework of the societies to enable the societies to work in a more efficient and transparent manner by bring the societies under the legal framework of The Companies Act,2013.
The existing societies have an option to convert them into a Private Company as per the Companies Act,2013 which would envisage them with the following benefit –
- Well established corporate governance process
- Timely filing of financials and annual accounts with the registrar under Section 129
- Regular Board and Committee meetings
Also, a private companies with charitable objectives can be incorporated under Section 8 of the Companies Act,2013
Section 8 companies are the companies which may be incorporated for
- charitable or not-for-profit purposes for charity, sports, promoting commerce, art, science, education, research, social welfare, religion, protection of environment or any such other object
- They shall apply the income for promoting the objects of the company.
- No dividend shall be paid to its members.
STEP 1: PASSING OF SPECIAL RESOLUTION
- As per Section 366 of the Companies Act, 2013, there is a requirement for a special resolution. Three-fourth of the members of the society should vote in favor of the special resolution to convert the society into a section 8 company.
- Prior consent from secured and unsecured creditors must have been obtained by the society.
- After a special resolution is passed in the meeting of members of society for such conversion All the promoter Directors of the Section 8 Company are required to obtain Digital Signature Certificate, and Director Identification Number along with the requisite documents as specified in Annexure 1.
STEP 2: OBLIGATION OF COMPANIES SEEKING REGISTRATION TO MAKE PUBLICATION –
- For the purpose of clause (b) of section 374 of the Act, every ‘society’ seeking registration shall publish an advertisement about registration under the said Part, seeking objections, if any within twenty-one clear days from the date of publication of notice and the said advertisement shall be in Form No.URC. 2, which shall be published in a newspaper and in English and in the principal vernacular language of the district in which Society is in existence and circulated in that district.
- Notice shall be given to the concerned Registrar (Society) under which it was originally registered and shall require that objections, if any to the Registrar, shall be made within a period of twenty-one days from the date of such notice, failing which it shall be presumed that they have no objection and the notice shall disclose the purpose and substance of matters in relation to objections.
- The Registrar shall, after considering the application and the objections, if any, received by him within thirty days from the date of publication of advertisement, and after ensuring that the company has addressed the objections, suitably decide whether the registration should or should not be granted.
STEP 3: FILING OF FORM URC 1 WITH ROC –
A registered Society shall file a Form No. URC. 1 for proposed conversion to registration as a company limited by guarantee under section 8 and shall attach the documents mentioned in Annexure 2.
There should be two or more members for the purpose of registration.
STEP 4: GRANTING OF LICENSE BY REGISTRAR
Where an application is made by a society or trust for registration as a company limited by guarantee and it has been proved to the satisfaction of the Registrar that the proposed company has its objects in accordance with clause (a) of subsection (1) of section 8 of the Act and it intends to comply with the restrictions and prohibitions as mentioned respectively in clause (b) and clause (c) of that sub-section,
The Registrar shall issue a license in Form No. INC. 16 to allow such society or trust to be registered as a limited company under Section 8
STEP 5: INCORPORATION OF SECTION 8 COMPANY
After obtaining the license , the society shall apply for Name approval of the proposed Company in Part A of Spice+ .Thereafter Filing of Memorandum and Articles of Association (AoA) is required with other relevant papers as mentioned in Annexure 3 in Part B of Spice.
Thereupon the registrar will issue a certificate of incorporation in Form No.INC.11 for the incorporation of company.
STEP 6: DISSOLUTION OF SOCIETY-
Where a Society has obtained a certificate of registration as per section 367, an intimation to this effect shall be given, within fifteen days of such registration to the concerned Registrar (society) under which it was originally registered, along with necessary documents or papers for its dissolution as Society.
Annexure 1: Documents Required for DSC & DIN :
- Identity Proof: Copy of PAN Card – Self-Attested and attested by a Govt. Gazetted Officer
- Address Proof: Copy of Aadhar Card or Driving License) – Self-Attested and attested by a Govt. Gazetted Officer
- Photos: Soft Copy of Passport Size Photograph
Annexure 2 : LIST OF DOCUMENTS FOR FILING FORM URC-1
- A list showing the names, addresses and occupations of all persons, who on a day, not being more than six clear days before the day of seeking registration, were members of the society with proof of membership;
- A list showing the particulars of persons proposed as the first directors of the company, along with DIN, passport number, if any, with expiry date, residential addresses and their interests in other firms or bodies corporate along with their consent to act as directors of the company;
- A list containing the names and addresses of the members of the governing body of the society;
- A certified copy of the certificate of registration of the society;
- Written consent or No Objection Certificate from all the secured creditors of the applicant;
- Written consent from the majority of members whether present in person or by proxy at a general meeting agreeing for such registration, and the resolution shall also provide for declaration of the amount of guarantee;
- An undertaking that the proposed directors shall comply with the requirements of the Indian Stamp Act, 1899 (2 of 1899) as applicable;
- A copy of the latest income tax return of the society;
- Details of the objects of the company along with a declaration from all the members that the restrictions and prohibitions as mentioned in clause (b) and clause (c) of sub-section (1) of section 8 of the Act shall be complied.
- In case a society or trust intending to register as a company under section 366 of the Act is registered under section 12A of the Income Tax Act, 1961 (43 of 1961) for claiming exemption on its income, an intimation in this regard shall be sent to the Income- tax authorities and proof of its service shall be attached.
- A copy of the notice, as published and the copy of the notice served on Registrar (Societies) along with proof of service, shall be attached.
- Statement of accounts, prepared not later than fifteen days preceding the date of seeking registration and certified by the Auditor together with the Audited Financial Statements of the previous year, wherever applicable shall be attached.
[Provided that if the assets of the existing company during the immediately preceding three years are revalued for the purpose of vesting of its assets with the company to be incorporated under this Act, the surplus arising out of such revaluation shall not be deemed to have been credited to the capital account or current account of partners.]
- An undertaking from all the members or partners or trustees providing that in the event of registration as a company under Part I of Chapter XXI of the Act, necessary documents or papers shall be submitted to the registering or other authority with which the company was earlier registered, for its dissolution
- The list of members and directors and any other particulars relating to the company which are required to be delivered to the Registrar shall be duly verified by the declaration of any two or more proposed directors.”.
Annexure 3 : DOCUMENTS REQUIRED FOR COMPANY REGISTRATION :
For the Proposed Company:
- Suggested Name of the Company (preferably 3 choices)
- Proof of Proposed Address of the Registered Office
(Rental Agreement or Lease Deed along with rent receipts, And Telephone bill or Gas Bill or Mobile bill or EB Card with last two months bill Payment Receipt )
For the proposed Directors/Shareholders
- Copy of PAN Card (mandatory)
- AnyTwo of the following as proof of Identity:
(Copy of Passport or Voters Identity Card or Driving License or Aadhar Card)
- Any Oneof the following as proof of residence:
(Bank Statement or Electricity Bill or Telephone Bill or Mobile Bill.)