Companies registered under Section 8 can close their company by surrendering their license to operate as a charitable company. Such license can be surrendered by converting the company into a normal company other than a Section 8 company.

Section 8 company cannot be converted to One Person Company.

Procedure to convert a section 8 company into a company of any other kind according to Rule 21 and Rule 22.

Rule 21 prescribes the following conditions for conversion of a company registered under Section 8 into a company of any other kind:

(1) A special resolution shall be passed in a general meeting of the members of the company for approving the conversion of section 8 company into any other kind of company.

(2) The explanatory statement annexed to the notice convening the general meeting shall set out in detail the reasons for opting such conversion including the following , namely:

• The date of incorporation of the company

• The main object of the company mentioned in the memorandum of association of the company

• The reasons as to why the activities for achieving the objects of the company cannot be carried on in the current structure i.e as a section 8 company.

• If the main object of the company is proposed to be altered, the reason for such alteration in the object of the company and what would be the altered object.

• Concessions enjoyed by the company, such as tax exemptions, approvals regarding receiving donations including foreign contribution, land and other immovable property. Details regarding the donations received by the company with conditions attached to their utilization

• Details of impact of the proposed conversion on the members including the details of any benefits that may accrue to the members as a result of such conversion.

(3) A certified true copy of the special resolution with a copy of the notice for convening the general meeting including the explanatory statement shall be filed with the Registrar in form no. MGT-14 along with fee.

(4) An application shall be filed with the regional director in Form INC 18 along with the requisite fees with the following documents:

• A certified true copy of the resolution passed in the general meeting.

• A copy of the notice convening the general meeting including the explanatory statement for approval of the members for such conversion.

• Proof of serving the notice to all the authorities mentioned below:

(a) To the Chief Commissioner of Income Tax having jurisdiction over the company

(b) To the Income Tax Officer who has jurisdiction over the company

(c) To the Charity Commissioner

(d) To the Chief Secretary of the State in which the registered office of the company is situated

(e) Any organisation or Department of the Central Government or State Government under whose jurisdiction the company has been operating.

(5) A copy of the application filed with the regional director is required to be filed with the registrar of companies.

Following other conditions necessary for the conversion of section 8 company into any other kind of company as per Rule 22.

(1) The company shall, within a week from the date of submitting the applications to the Regional Director, publish a notice at its own expense , and a copy of the notice shall be sent to the Regional Director in Form No. INC- 19

(2) The notice shall be published:

• at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district and

• On the website of the company, if any, and as may be notified or directed by the Central Government.

(3) A declaration shall be given by the board of directors that no income of the company has been paid directly or indirectly to the persons who are or have been the members of the company or to any one or more of them or to any persons claiming through any one or more of them.

(4) A company is required to file its financial statement and annual returns up to the financial year preceding the application are submitted to the regional director and other returns are required up to the date of submission of application. In case the application is filed after the expiry of 3 months from the date of preceding financial year in which the financial statement is filed and the financial statement must be duly certified by the Chartered Accountant up to the date of not preceding 30 days of filing the application shall be attached;

(5) A Certificate shall be attached with the application, obtained from professional “practicing Chartered Accountant or Company Secretary or Cost Accountant” certifying the conditions and rules related to the conversion of section 8 company into any other kind of company have been complied with.

(6) The Regional Director may require the approval of the authority for such conversion from the applicant and may also obtain the report from the registrar.

Compliance after approval

On receipt of the approval of the Regional Director the company shall convene a general meeting to pass a special resolution for amending the memorandum of association and articles of association. The company shall file with the Registrar:

• A certified copy of the approval of the Regional Director within 30 days from the date of receipt of order in Form INC -20.

• Amended memorandum of association and articles of association of the company.

• A declaration by the directors that the conditions, if any imposed by the Regional Director have been fully complied with.

Once the company is converted into a normal company then the company can go for winding up of the company as per the procedure provided under the Companies Act, 2013 or as per the Insolvency and Bankruptcy Code 2016.