Checklist for Conversion of Society into Section 8 Company

The Indian non-profit sector is vibrant, with thousands of organizations working tirelessly for education, healthcare, social welfare, arts, and cultural promotion. Many of these are registered as Societies under the Societies Registration Act, 1860, which primarily serves state-level operations.

However, with evolving legal frameworks, funding requirements, and regulatory standards, many societies are now considering conversion into a Section 8 Company under the Companies Act, 2013. This conversion provides national recognition, improved governance, and better funding opportunities.

If you are planning this transition, here is a comprehensive checklist for the conversion of a Society into a Section 8 Company.

Table of Contents

Understanding Section 8 Company

A Section 8 Company is a non-profit entity registered under the Companies Act, 2013, with objectives such as:

Promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection.
Applying its profits or income solely for promoting its objectives.
Prohibiting distribution of dividends to its members.

Section 8 Companies enjoy better governance, credibility, and government recognition compared to societies or trusts.

Can a Society Convert into a Section 8 Company?

Yes. A registered society can voluntarily apply for conversion into a Section 8 Company by following the prescribed legal process. However, this involves several steps, approvals, and documentation.

Key Benefits of Conversion

Separate Legal Entity status under Companies Act, 2013.
Higher credibility with donors, government agencies, and corporates.
Easier access to CSR funding.
Enhanced transparency due to mandatory regulatory compliances.
National recognition (unlike societies registered only in specific states).

Pre-Requisites for Conversion

Registered Society Status
- The society must be registered under the Societies Registration Act, 1860, or any relevant state legislation.
Special Resolution by Society Members
- Must be passed by ¾ of total members (either in person or by proxy).
- Resolution should authorize the transfer of all assets and liabilities.
- The society should have at least 7 members at the time of conversion.
Creditors’ Consent
- Obtain written consent from all secured and unsecured creditors.
Good Standing
- The society should not be in default with the Registrar of Societies.

Step-by-Step Checklist for Conversion

1. Obtain Digital Signatures

Apply for Digital Signature Certificates (DSC) for all proposed directors and members.

2. Reserve the Company Name

Apply via SPICe+ Part A for name reservation.
Alternatively, directly apply in SPICe+ Part B with incorporation filing.

3. Publish Newspaper Advertisement

Advertise the conversion intent in:
- One English newspaper
- One vernacular language newspaper
Notify the Registrar of Societies about the proposed conversion.

4. Draft Essential Documents

Memorandum of Association (MOA) & Articles of Association (AOA) as per Section 8 norms.
Affidavits & Declarations from proposed directors/members.
Special Resolution for conversion.
List of existing members & proposed directors.
No Objection Certificate (NOC) from creditors.
List of pending legal cases (if any).
Statement of Accounts (not older than 15 days).
Members’ consent for Section 8 compliance.
Undertaking for Stamp Act compliance.

5. File Incorporation Forms with CRC, Manesar

After 21 days of newspaper publication (within 30 days), file the following forms:
- SPICe+ Part B
- URC-1
- AGILE-PRO-S
- e-MOA & e-AOA
- INC-9

Attachments Required:

List of members & proposed directors
Society Registration Certificate & PAN
Creditors’ NOC
Special Resolution copy
Latest Income Tax Return or Assessment Order
Pending legal cases statement (if applicable)
Recent Financial Statement (not older than 15 days)
Members’ Section 8 compliance consent
Newspaper advertisement copies
Registered office address proof
Other affidavits and declarations

6. Receive Certificate of Incorporation & Conversion

Issued by Registrar of Companies (ROC), CRC, Manesar, after verification.

Post-Incorporation Compliance Checklist

File Annual Returns & Financial Statements with ROC
Apply for 12A & 80G registration under Income Tax Act
Maintain Books of Accounts
Conduct Board & General Meetings as per Companies Act
Comply with CSR laws (if applicable)
Regular MCA filing and regulatory compliance
Update Tax Authorities about the new legal status

Conclusion

The conversion of a society into a Section 8 Company is a strategic move for organizations aiming to strengthen their legal standing, enhance transparency, and unlock better funding opportunities. However, it requires thorough compliance with regulatory norms and timely approvals from various authorities.

By following this detailed checklist, societies can navigate the conversion process smoothly and ensure compliance with the Companies Act, 2013.

If you need expert assistance for conversion or Section 8 Company registration, feel free to reach out to our professional team.

FAQs on Conversion of Society into Section 8 Company

Q1. Can a registered Society convert into a Section 8 Company under the Companies Act, 2013?
Yes. Under Section 366 of the Companies Act, 2013, a registered society can convert into a Section 8 Company, subject to fulfilling the prescribed conditions.

Q2. Is prior dissolution of the Society required before conversion into a Section 8 Company?
No. Dissolution is not required. The Society continues in a new legal form after conversion as a Section 8 Company.

Q3. What is the governing law for conversion of Society into a Section 8 Company?
The conversion is governed by Section 366 read with Rule 3 of the Companies (Authorised to Register) Rules, 2014, along with Section 8 provisions of the Companies Act, 2013.

Q4. How many members are required in the Society for conversion?
Minimum 7 members are required, and they must provide written consent for conversion.

Q5. What are the key documents required for conversion?
Key documents include:

Consent of Members
Declaration by two directors
List of members and directors
Certified copy of Registration Certificate of Society
Certified copy of Bye-laws or Rules of the Society
No Objection Certificate (NOC) from concerned Registrar of Societies

Q6. Is approval from the Registrar of Societies mandatory for conversion?
Yes. An NOC from the respective Registrar of Societies is generally required as part of the conversion process.

Q7. Can a society with charitable objectives convert into a Section 8 Company?
Yes. Societies engaged in charitable, social welfare, education, or non-profit objectives are eligible to convert into Section 8 Companies.

Q8. What are the post-conversion compliances for a Section 8 Company?
Post conversion, the company must comply with:

Annual ROC Filings
Section 8 compliance requirements
Maintenance of books and accounts
Adherence to CSR (if applicable)

Q9. Can society members become directors in the Section 8 Company?
Yes. The existing members can act as directors or subscribers of the new entity.

Q10. What is the benefit of converting a Society into a Section 8 Company?
Benefits include better governance under corporate law, enhanced credibility, eligibility for CSR funding, access to grants, tax exemptions, and recognition at national and international levels.