Conversion of Section 8 Company to Private Limited Company: Process, Forms, and Fees
To convert a Section 8 company into a private company, pass a special resolution, file MGT-14 and INC-18, publish the required notice in INC-19, and file the Regional Director’s approved order with the ROC in INC-20 within 30 days. The ROC then issues a fresh Certificate of Incorporation. Section 8(4)(ii) of the Companies Act, 2013, read with Rules 21 and 22 of the Companies (Incorporation) Rules, 2014, governs the conversion.
Conversion allows a Section 8 company to move from a non-profit structure to a regular profit-oriented company while continuing as a corporate entity. Businesses may consider conversion when their objectives change, they want to operate commercially, or they need greater flexibility to raise and deploy capital.
Key Takeaways
- A Section 8 company can convert into a private limited company under Section 8(4)(ii) of the Companies Act, 2013, read with Rules 21 and 22 of the Companies (Incorporation) Rules, 2014.
- The company must obtain prior approval from the Regional Director and cannot complete the conversion through an internal resolution alone.
- The process involves MGT-14, INC-18, INC-19, and INC-20, filed at different stages of the conversion.
- After conversion, the company loses the special concessions available to a Section 8 company and must deal with its accumulated income and assets as directed by the Regional Director.
- The ROC issues a fresh Certificate of Incorporation, after which the company follows the compliance requirements applicable to a private limited company.
Conditions and Pre-Conversion Checklist
Before applying for conversion, a Section 8 company must meet the prescribed conditions and complete these formalities:
- Obtain members’ approval through a special resolution at a general meeting. Include an explanatory statement that clearly explains the reasons for conversion.
- Clear outstanding dues, loans, and creditor obligations, or make adequate provisions for them. Obtain creditors’ consent wherever required.
- Obtain a No Objection Certificate from the Income Tax Department and notify other relevant authorities that granted approvals, grants, or land concessions.
- Prepare a statement of assets and liabilities and properly account for accumulated income and reserves.
- Give up the exemptions and concessions available to the company as a Section 8 entity. The Regional Director may also require the company to repay or account for benefits it previously received.
- Bring annual filings, statutory registers, financial statements, and other regulatory records up to date before submitting the conversion application.
Documents Required for Conversion from Section 8 to Private Company
Prepare the following documents before filing the conversion application:
- Certified copies of the Board resolution and special resolution.
- Notice of the general meeting with the explanatory statement
- Amended Memorandum and Articles of Association.
- Audited financial statements for the preceding three years.
- Certified statement of assets and liabilities dated not more than 30 days before the application.
- No Objection Certificate from the Income Tax Department.
- List of members and their consent to the conversion.
- Details of any pending litigation.
- Directors’ declaration confirming compliance with the applicable conditions.
- Copies of notices served on relevant authorities and creditors, along with applicable NOCs.
How to Convert a Section 8 Company into a Private Limited Company? Step-by-Step Process
Follow these steps to convert your Section 8 Company to a Private Limited Company:
Step 1: Hold a Board Meeting and Pass a Special Resolution
Hold a board meeting to approve the proposed conversion and call a general meeting. Then, obtain members’ approval through a special resolution for the conversion, change of name, and alteration of objects.
Step 2: File the Special Resolution in Form MGT-14
File the special resolution with the Registrar of Companies in Form MGT-14 within 30 days of passing it.
Step 3: Apply to the Regional Director in Form INC-18
Submit the application for conversion with the Regional Director in Form INC-18, attaching the:
- Resolutions
- Amended MOA and AOA
- Audited financials
- Statement of assets and liabilities
- Supporting documents
Also, file a copy of the application with the ROC.
Step 4: Publish the Notice in Form INC-19 and Notify the Authorities
- Within one week of filing INC-18, publish the notice in Form INC-19 in one English and one vernacular newspaper circulating in the district.
- Send the notice to the Regional Director and notify the Income Tax Department, ROC, Charity Commissioner, and other applicable regulators.
Step 5: Obtain Regional Director’s Approval
The Regional Director reviews the application, considers objections, and may request additional information or impose conditions before approving the conversion.
Step 6: File the RD order in Form INC-20 within 30 days
Once the Regional Director passes the approval order, file it with the ROC in Form INC-20 within 30 days, along with the updated documents.
Step 7: Receive the Fresh Certificate of Incorporation
After completing the required filings, the ROC issues a fresh Certificate of Incorporation. It should reflect the company’s status as a private limited company and adding “Private Limited” to its name.
The process typically takes 2 to 4 months, depending on the notice and objection period and any additional information or clarifications requested.
Fees for Conversion of Section 8 Company to a Private Company
The total conversion cost includes the following cost components:
| Cost Component | Indicative Fee |
| MCA filing fees (MGT-14, INC-18, INC-20) | ₹200–₹600 per form, depending on authorised share capital |
| Stamp duty on altered MOA and AOA | ₹1,000–₹5,000, depending on state and capital |
| Newspaper publication | ₹5,000–₹15,000 for two newspapers |
| Professional fees | Starting from ₹1,999, depending on the scope of work |
| Estimated total | ₹10,000–₹40,000+ |
Post-Conversion Compliance After Conversion to Pvt Company
Once converted, the entity must meet the compliance requirements applicable to a private limited company:
- Change the company name to “Private Limited” across official records.
- Update the PAN, TAN, bank accounts, GST registration, licences, and other registrations where required.
- File AOC-4 within 30 days of the AGM and MGT-7 within 60 days of the AGM.
- Submit DIR-3 KYC for each director by 30 September of the relevant financial year.
- File regular income-tax returns and pay applicable taxes without the exemptions available to a Section 8 company.
- Keep statutory registers updated, hold required board meetings, and comply with the applicable provisions of the Companies Act, 2013.
Why Convert a Section 8 Company into a Private Limited Company?
A Section 8 company may consider conversion when its objectives, funding model, or operations no longer suit a non-profit structure. Common reasons include:
- Move to profit-oriented activities: The company may want to pursue commercial activities and generate profits for its shareholders.
- Distribute profits: Unlike a Section 8 company, a private company can distribute profits to shareholders through dividends, subject to applicable law.
- Attract equity investors: A private limited structure provides a clearer framework for bringing in investors and issuing or transferring shares.
- Change business objectives: The company’s activities may have shifted from charitable or social objectives to commercial or business-focused operations.
- Offer ownership interests: Conversion allows the company to structure ownership through shares and give investors an equity interest in the business.
- Expand commercial operations: Pvt Ltd Company Registration supports business expansion, new product lines, and other profit-oriented ventures.
- Align structure with business goals: If the company no longer operates primarily for charitable or social purposes, conversion can bring its legal structure in line with its actual activities.
- Prepare for future restructuring: Promoters may prefer a conventional corporate structure when planning further investment, ownership changes, or other commercial transactions.
