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Strike Off of Sec 8 Company

STRIKE OFF OF SECTION 8 COMPANIES

Under the Companies Act, 2013, if a Section 8 company (a non-profit company) wishes to cease its operations, it must undergo a conversion process into either a private or public company before proceeding with its closure. Hence, the entire process has two stages. 

Stage one: Conversion of Section 8 Company to Private or Public Company (OPC not allowed)

Stage Two: Application for Strike off

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    Stage 1: Below is a detailed outline of the process for converting a Section 8 company to a private or public company:

    1. Pass Resolutions for Approval

    • The company must pass resolutions at both the Board meeting and shareholders’ meeting to approve the decision to convert the Section 8 company into a private or public company, or to surrender its Section 8 license

    2. File Form MGT-14

    • After the special resolution is passed, the company must file Form MGT-14 with the Registrar of Companies (RoC) within 30 days. This form must contain details of the passed resolution and confirm that necessary approvals have been obtained.

    3. Submit Form INC-18 to the Regional Director

    • The company needs to file Form INC-18 with the Regional Director (RD), along with the following documents:
      • A CA-certified statement of accounts, dated within 30 days of the application (if the application is filed after 3 months from the end of the previous financial year).
      • A Compliance Certificate confirming that the company has complied with all the relevant provisions of the Companies Act, 2013 and its rules.
      • Proof of notice served on other authorities, including the Income Tax Department and other regulatory bodies, informing them of the proposed conversion.

    4. File Form GNL-1

    • A copy of the application filed with the Regional Director (Form INC-18), along with annexures, must also be filed with the Registrar of Companies (RoC) through Form GNL-1.

    5. Publish Newspaper Advertisements

    • Within 7 days of submitting the application to the Regional Director, the company must publish an advertisement in two newspapers: one in English and the other in a vernacular language of the region.
    • The advertisement must also be uploaded on the company’s official website.

    6. Intimate Relevant Authorities

    • The company must notify relevant authorities such as:
      • Chief Commissioner of Income Tax
      • Income Tax Officer
      • Charity Commissioner
      • Chief Secretary of the state
      • Other government authorities having jurisdiction over the company.
    • The notice must be sent via registered post or hand delivery along with a copy of the application and all attachments.
    • Authorities have 60 days to submit any objections or representations. The company must address any concerns raised by these authorities.

    7. Amend the MOA and AOA

    • Upon receiving approval from the Regional Director, the company must pass a special resolution to amend its Memorandum of Association (MOA) and Articles of Association (AOA) to reflect the change in its status from a Section 8 company to either a private or public company.

    8. File Form INC-20 with the RoC

    • After receiving approval from the Regional Director, the company must file Form INC-20 with the Registrar of Companies (RoC) within 30 days. This form must include:
      • A copy of the approval order from the Regional Director.
      • The amended MOA and AOA in electronic format (e-MOA and e-AOA).
      • A declaration from the directors confirming that all conditions specified by the Regional Director have been fulfilled.

    Stage 2: Striking Off the Company

    Stage 2: Striking Off the Company

    If a company wishes to close or dissolve itself, it can apply for strike-off. The process involves the following steps:

    1. Pass Resolutions for Approval

    • The company must pass resolutions at both the Board meeting and shareholders’ meeting to approve the decision to close the company.

    2. File Form STK-2

    • The company must file Form STK-2 with the Registrar of Companies (RoC) to apply for strike-off.
    • Along with this form, the following documents must be submitted:
      • Affidavit and Indemnity: An affidavit signed by all directors confirming that they are responsible for the company’s liabilities and indemnifying the company against any future claims.
      • CA Statement of Accounts: A Certified Account Statement (prepared by a Chartered Accountant), indicating that the company has no outstanding liabilities. This statement must be dated within 30 days of filing the application.
      • KYC Documents of Directors: Copies of KYC documents for each director, including:
        • PAN Card
        • Aadhar Card
        • Proof of residential address (not older than 2 months)

    These documents must be submitted as part of the company’s closure process to ensure that it is free from any liabilities and fully compliant with legal requirements.