LICENCE FOR NON – PROFIT COMPANIES


We have discussed incorporation of Companies including non – profits under Section 8 of the Companies Act 2013 earlier here. In this post we will discuss licence for non profit companies, including new companies or conversion of an existing company into a non – profit.

LICENSE UNDER SECTION 8 FOR NEW COMPANIES WITH CHARITABLE OBJECTS:

A person or an association of persons (hereinafter referred to in this rule as “the proposed company”), desirous of incorporating a company with limited liability under sub-section (1) of section 8 without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, shall make an application in Form INC – 12 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the Registrar for a license under sub-section (1) of section 8. [Rule 19(1)]

The memorandum of association of the proposed company shall be in Form No INC – 13. [Rule 19(2)]

The application shall be accompanied by the following documents, namely:—

  1. the draft memorandum and articles of association of the proposed company;
  2. the declaration in Form INC – 14 by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in practice, that the draft memorandum and articles of association have been drawn up in conformity with the provisions of section 8 and rules made thereunder and that all the requirements of the Act and the rules made thereunder relating to registration of the company under section 8 and matters incidental or supplemental thereto have been complied with;
  3. an estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure;
  4. the declaration by each of the persons making the application in Form INC – 15. [Rule 19(3)]

LICENSE FOR EXISTING COMPANIES

A limited company registered under this Act or under any previous company law, with any of the objects specified in clause (a) of sub-section (1) of section 8 and the restrictions and prohibitions as mentioned respectively in clause (b) and (c) of that sub-section, and which is desirous of being registered under section 8, without the addition to its name of the word “Limited” or as the case may be, the words “Private Limited”, shall make an application in Form INC – 12 along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the Registrar for a licence under sub-section (5) of section 8. [Rule 20(1)]

The application under sub-rule (1), shall be accompanied by the following documents, namely:-

  1. the memorandum and articles of association of the company;
  2. the declaration as given in Form No.INC.14 by an Advocate, a Chartered accountant, Cost Accountant or Company Secretary in Practice, that the memorandum and articles of association have been drawn up in conformity with the provisions of section 8 and rules made thereunder and that all the requirements of the Act and the rules made thereunder relating to registration of the company under section 8 and matters incidental or supplemental thereto have been complied with;
  3. For each of the two financial years immediately preceding the date of the application, or when the company has functioned only for one financial year, for such year (i) the financial statements, (ii) the Board’s reports, and (iii) the audit reports, relating to existing companies
  4. a statement showing in detail the assets (with the values thereof), and the liabilities of the company, as on the date of the application or within thirty days preceding that date;
  5. an estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure;
  6. the certified copy of the resolutions passed in general/ board meetings approving registration of the company under section 8; and
  7. a declaration by each of the persons making the application in Form INC – 15. [Rule 20(2)]

The company shall, within a week from the date of making the application to the Registrar, publish a notice at his own expense, and a copy of the notice, as published, shall be sent forthwith to the Registrar and the said notice shall be in Form INC – 26 and 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 or is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district; and
  2. on the websites as may be notified by the Central Government. [Rule 20(3)]

The Registrar may require the applicant to furnish the approval or concurrence of any appropriate authority, regulatory body, department or Ministry of the Central Government or the State Government(s). [Rule 20(4)]

The Registrar shall, after considering the objections, if any, received by it within thirty days from the date of publication of notice, and after consulting any authority, regulatory body, Department or Ministry of the Central Government or the State Government(s), as it may, in its discretion, decide whether the license should or should not be granted. [Rule 20(5)]

The licence shall be in Form INC – 16 or Form INC – 17, as the case may be, and the Registrar shal have power to include in the licence such other conditions as may be deemed necessary by him. [Rule 20(6)]

The Registrar may direct the company to insert in its memorandum, or in its articles, or partly in one and partly in the other, such conditions of the license as may be specified by the Registrar in this behalf. [Rule 20(7)]

Revocation of licence

Where the licence granted to a company registered under section 8 has been revoked, the company shall apply to the Registrar in Form INC – 20 along with the fee to convert its status and change of name accordingly.

Please note: I welcome your comments and feedback. This blog post is not a professional advice. Readers may share this post on social media by using buttons given here.

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One response to “LICENCE FOR NON – PROFIT COMPANIES

  1. Pingback: Index of Companies Law Posts | AishMGhrana

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