Tuesday, July 27, 2010

Incorporation of Section 25 Company in India

Logo of the non-profit organization for preser...Image via Wikipedia


 REGISTRATION OF A COMPANY UNDER Section 25 of the Companies Act, 1956. (A NON PROFIT MAKING COMPANY)

A non-profit company may be public or private. If the non-profit company is a private company a minimum of only two members is required to form it. However, if the non-profit from is for a public purpose, then a minimum of seven are needed. A 'Section 25 company' and is eligible for certain exemption from provisions of law and concessional rate of fees etc.

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Steps for establishing a section 25 Company
1. Application for a name applying for availability of name to the Registrar of Companies is the first step towards registration of the non-profit company. Four names are to be suggested to the Registrar in prescribed Form.

2. Memorandum and Articles Memorandum and Articles of the non-profit company are required to be approved by the Regional Director and the ROC. The documents required for submission of application are:

i)             Three printed copies of the memorandum and articles of association of the applicant company, signed by all the promoters with full name, address and occupation (No stamp duty is payable on the Memorandum and Articles of Association)

ii)            A declaration by an advocate or a chartered accountant that the memorandum and articles of association have been drawn up in conformity with the provisions of the Act and that all the requirements of the Act and the rules made there under have been duly complied with, in respect of registration;

iii)           List of the names, addresses and occupation of the promoters, members of board of directors, name of companies, associations and other institutions in which promoters of the applicant company are directors or hold positions, description of the positions held by them (three copies)

iv)           A statement of assets and liabilities( “only existing company)

v)            Source of income of the Applicant Company and estimate of annual expenditure;

vi)           A statement giving a brief description of the work, if any, already done by the association and of the work proposed to be done by it after registration in pursuance of section 25;

vii)         A statement on grounds on which the application is made under section 25 of the Companies Act, 1956;

viii)        A declaration by each of the persons making the application that he/she is of sound mind, not an undischarged solvent, not convicted by a court for any offence and does not stand disqualified under section 203 of the Companies Act, 1956 for appointment as director.

 3. License under section 25 An application for the license under 25 for the company is to be submitted to the Regional Director (Department of Company Affairs). The license essentially permits the word 'Limited' or 'Private Limited' to be deleted from name of the company. It could take upto 12 weeks after application to receive the license under section 25 of the Companies Act 1956. Pursuant to application to the Regional Director (within seven days thereafter), the applicant company has to publish a notice in a newspaper where the registered office is situate and certified copy of the notice to filed with the Regional director.
 4. Registration with ROC Registration certificate is normally granted within one month after filing section 25 licenses; Converting existing company to section 25 companies The Companies Act, 1956 also facilitates the conversion of an existing company to a non-profit company. Foreign Director There is no bar under Indian law for a foreigner to be a Director in a section 25 company, (relevant permissions prescribed under the Foreign Exchange Management Act.).



·         Registration procedure

 An application in form 1A is to be made to the Registrar of Companies along with a fee of Rs. 500/- Desired names for the organization in the order of preference are to be mentioned in the application form. Normally, the Registrar inform about the availability of the name within 7 days.
Following documents are required
    1. Draft of the Memorandum and Articles of Association. (In triplicate).
    2. Details such as name, address, occupation of the promoters. (In triplicate).
    3. List of companies, associations in which the promoters are directors or hold responsible position with the description of the position held.
    4. List of the proposed members of the Board of Directors.
    5. Declaration signed by an Advocate / Chartered Accountant / Company Secretary on non-judicial stamp paper of appropriate value.
    6. The proposed sources of income and the expenditures thereof.
    7. A note on the proposed activities and also the past activities, if any.
    8. A statement of the grounds for making an application under section 25. In this statement a reference to the relevant clause in the Memorandum of Association regarding the Vision and Mission of the proposed company should be made.
    9. Declaration signed by all the promoters on non-judicial Stamp Paper of appropriate value.
    10. In case of an existing society applying for conversion into a section 25 company, audited statement of accounts and annual report of the society for the past two years (in triplicate) should be submitted.
    11. A certified copy of the notice to be published in newspapers.
Within one week of making an application to the Regional Director a notice is required to be published in one English newspaper and one vernacular newspaper of the local area in which the Registered Office is situated.

·         Grant of License and Certificate of incorporation

The Regional Director scrutinizes the application received by him. The Registrar of Companies, to whom a copy is sent, also forwards his recommendations to the Regional Director.
The Government by issue of license allow an association be registered as a company with limited liability for the members, without the addition to its name of the word "Limited" or the words "Private Limited".
After receiving the license / approval an application is to be made to the Registrar of Companies (ROC) along with following documents:
    1. Printed copy of the Memorandum and Articles of Association.
    2. The license granted by the Regional Director.
    3. One copy of Form 1
    4. One copy of Form 18
    5. Two copies of Form 32
    6. The requisite amount of fees payable which is Rs. 50 plus Rs. 10 per document; i.e., Form1, Form 18, Form 32.
The Registrar of Companies after scrutinizing the requisite documents shall issue a Certificate of Incorporation.

FORMATE OF APPLICATION TO RD
 
To,
(NAME)
Regional Director
Address

Sub: Application for Registration of a Company under Section 25 of the Companies Act, 1956
Dear Sir,
We are desirous of incorporating our association as a company with limited liability without the addition of the word “Limited” to its name. enclosed herewith find the following documents for your consideration :
1.        Draft of Memorandum of Association of the proposed company (in triplicate).
2.        Draft of Articles of Association of the proposed company (in triplicate).
3.        Declaration as per annexure V of Companies Regulation Act, 1956.
4.        Future annual income and expenditure estimates (in triplicate)
5.        Assets and liabilities statement with their estimated value as on seven days before making the application.
6.        Declaration by the advocate that the Memorandum and Articles of Association have been drawn in conformity with provisions of the Act.
7.        Details of the promoters and of the proposed directors of the Company.
8.        A list of the names, addresses, descriptions and occupations of the directors and of its managers or secretary, if any, together with the names of companies, associations and other institutions, in which the directors of the applicant company are directors or hold responsible positions, if any with the descriptions of the position so held.
9.        Statement of brief description of the work, if already done by the association and the work proposed to be done.
10.      Statement of the grounds on which application is made (in triplicate).
11.      Certified copy of notice to be published in two newspapers.
12.      Copy of Challan evidencing the payment of fee for eform 24A.
A copy of the application alongwith enclosures is being endorsed to the Registrar of Companies, Mumbai for recommendations.

Yours faithfully,
(Applicant)






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19 comments:

God said...

Is it possible for a Sec. 25 company to amalgamate with a profit making company.

Devesh Pandey said...

Yes you can do so but in that case your licence under section 25 will be automatically revocked

Lavina said...

Can a registered Trust (Mumbai) be converted into a Section 25 company? If yes, what would the procedure be?

sathya said...

@lavina ya you can convert your trust into sec-25 company.i will mail you the procedure pls send ur mail id with ur query to cc@mcaindia.co.in

gg said...

can you send me the procedure to convert existing trust into sec-25 company.

My mail ID is mvnguru@gmail.com

Guru

sandeep gandhi said...

Which is better option for forming section 25 Company out of Company limited by member and company limited by shares

sandeep gandhi said...

What is better option for incorporation of section 25 company out of company limited by member or limited by shares

Mehul said...

pl anyone send me the process of conversion of trust into section 25 companies

Harshal said...

I also want to know the process of Conversion of trust in to Section 25 Company. so. plz Kindly mail me at gandhi.harshal38@gmail.com

Mehul said...

pl anyone send me the process of conversion of trust into section 25 companies

Mehul said...

pl anyone send me the process of conversion of trust into section 25 companies

Muninder Singh said...

can a public limited company b converted into sec 25 company??
if yes plz mail the procedure at my email id leo1991.singh@gmail.com

Muninder Singh said...

can a public limited company b converted into sec 25 company?????????????





















































































Madhan Kumar said...

Pls send me the procedure for conversion of existing public trust into section 25 company.. MY mail id is madhanblcs@gmail.com

sandeep said...

I also want to know the process of Conversion of trust in to Section 25 Company. so. plz Kindly mail me at mswsandeep@gmail.com

CA Shamsunder Mittal said...

I want to registed a trust u/s 25,can u help me.can u sent documets or attachment formats at my email ca.shyammittal23@gmail


thanks

CA SHYAM SUNDER MITTAL

CA Shamsunder Mittal said...

I want to register a company u/s 25.can u help me as tell the procedure.can u send the attachment and documents format at ca.shyammittal23@gmail.com

thanks

CA SHYAM SUNDER MITTAL
SHAMSUNDER & ASSOCIATES

Meher said...

can you send me the procedure to convert existing trust into sec-25 company.

My mail ID is meher@rna-cs.com

Meher said...

can you send me the procedure to convert existing trust into sec-25 company.

My mail ID is meher@rna-cs.com