CONVERSION OF SOCIETY INTO SECTION 8 COMPANY

[Kaumudi Joshi]

Hi friends,

A not for profit society registered under Societies Registration Act has 11 members. It is desirous of being converted into Section 8 company. In this regard, I had a few questions:

1. Will all members of the society have to be shareholders of Section 8 company, or can I convert the society in a company with say 7 - 8 members (assuming some members will move out prior to conversion voluntarily)?

2. If the Section 8 company wants to be a company limited by shares, then will no. of shares held by each shareholder be at the discretion of shareholders or all have to be given say equal shares?

Any clarification on the above will be much appreciated.

Thank you.

[Prashanth Kamath]

A registered society converting to a Section 8 company can only be incorporated as a company limited by guarantee, not by shares. This is a fundamental legal requirement under the Companies Act, 2013 for society-to-Section 8 conversions.

Regards 

Kamath 

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[Kaumudi Joshi]

Hi Sir,

Thank you. But Section 366(2) specifically provides that a society can be registered either as a company limited by guarantee or by shares or as unlimited guarantee?

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[Prashanth Kamath]

Rules mention about application by Society as a company limited by Guarantee under section 8 ... No mention of the limited by shares. Please have a look at. 

regards

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[FCA Chandrasekaran Ramadurai]