regarding formation of a company
This query is : Resolved
18 August 2009
i have to make a new company. which is non profit organisations. what the procedure for formation of a NPO company & is it limited or Pvt. limited.what is the requirement under sec 25
18 August 2009
Hi,
The objective of section 25 of the Companies Act, 1956 is to provide special benefits and privileges to such organisations, which are formed for the purpose of:
(a) promoting commerce, art, science, religion, charity or any other useful object, and
(b) apply its profits and incomes for promotion of its objects and prohibit distributing them as dividends.
Such associations enjoy their standing as a company and at the same time are not required to suffix the words 'private limited' or 'limited' as required under section 13(1)(a).
The objective of section 25 of the Companies Act, 1956 is to provide special benefits and privileges to such organisations, which are formed for the purpose of:
(a) promoting commerce, art, science, religion, charity or any other useful object, and
(b) apply its profits and incomes for promotion of its objects and prohibit distributing them as dividends.
Such associations enjoy their standing as a company and at the same time are not required to suffix the words 'private limited' or 'limited' as required under section 13(1)(a).
18 August 2009
PROCEDURE FOR FORMATION OF A NON-PROFIT MAKING COMPANY WITHOUT THE WORD "LIMITED" OR "PRIVATE LIMITED" IN ITS NAME
STEPS PRESCRIBED FOR INCORPORATION OF A SECTION 25 COMPANIES
1. Type of section 25 company
A section 25 company, which is proposed to be registered with limited liability, may either be a public limited company or a private limited company as may be decided by the promoters.
2. Membership in a section 25 company
Section 25(4) of the Companies Act provides that a partnership firm may become a member of section 25 companies; membership of such firm shall cease upon dissolution of the firm. However, partners of the dissolved firm may continue to be the members of such company in their individual capacity.
It is advisable that the firm should obtain membership in the individual name of the partners as they may agree.
3. No requirement of minimum paid-up capital
Requirement of minimum paid-up capital of Rs. 1.00 Lac for a private limited and Rs. 5.00 Lacs for a public limited company shall not be applicable to a company registered u/s 25 of the Companies Act, 1956.
APPLICATION TO THE CENTRAL GOVERNMENT FOR ISSUANCE OF LICENCE
The power u/s 25 has been delegated to the Regional Directors of the Ministry of Company Affairs. Accordingly, the application in e-Form 24A as prescribed by the Notification No. GSR 56(E) dated 10th Feb., 2006 (previously there was no form prescribed for that purpose) for grant of permission under the section is required to be made electronically to the concerned Regional Director (Mumbai/ Kolkata/ Chennai/Kanpur), in whose jurisdiction the registered office of the company is proposed to be situated. The application should be made in conformity with the procedure laid down in the Companies Regulations, 1956 (the said Regulations).
E-Form 24A has to be submitted with following enclosures in the PDF files:
I. In case of new association
(a) Memorandum of association (MoA).
(b) Articles of association (AoA).
(c) Declaration as per annexure V of Companies Regulation Act, 1956.
(d) Declaration by advocate of Supreme Court or High Court, attorney or pleader entitled to appear before a High Court, or a company secretary or chartered accountant in whole time practice that the MoA and AoA have been drawn in conformity with provisions of the Act.
(e) Details of the promoters and of the proposed directors of the company.
(f) A list of the names, addresses, descriptions and occupations of its directors and of its managers or secretary, if any, together with the names of companies, associations and other the directors of the applicant company are directors or hold responsible positions, if any with the descriptions of the positions so held.
(g) Statement of the grounds on which application is made.
(h) If any of the above documents is not in English or Hindi, then a translation of such document in English or Hindi.
II. In case of company already registered
(a) Future annual income and expenditure estimates.
(b) Assets and liability statement with there estimated value as on seven days before making the application.
(c) Last two years' accounts, balance sheet and report on working of the association as submitted to the members of the association.
(d) Statement of brief description of the work, if already done by the association and work proposed to be done.
(e) If any of the above documents is not in English or Hindi, then a translation of such document in English or Hindi.
CONTENTS OF MEMORANDUM AND ARTICLES OF ASSOCIATION
The Memorandum of Association of a proposed company under section 25 shall be in the form set out in Annexure I of the Companies Regulations, 1956 or in a form as near thereto as circumstances admit.
However, the section 25 company may adopt the normal format for its articles as applicable in case of a public or a private company as the case may be.
Other formalities
Before sending the application to Regional Director referred, it is advisable to submit a copy of the application with all documents to the Registrar of Companies of the State in which the registered office of the proposed company will be situated or the registered office of the company is situated as the case may be, and copy of the acknowledgement received from the Registrar of Companies, should also be enclosed with the application.
Publication of notice
Before making application to the Regional Director, the applicant should publish a notice in a newspaper in the principal language of the district in which the registered office of the proposed company to be or is situated and also in an English newspaper circulating in the district.
Granting of License
The Regional Director shall, after considering the objections, if any, received within 30 days from the date of publication of the notice in the newspaper, and after consulting any authority, department or ministry, as he may, in his discretion, decide, determine whether the licence should or should not be granted.
The Regional Director may also direct the company to insert in its memorandum, or in its articles, or in both, such conditions of the licence as may be specified by him in this behalf.
FEES FOR THE APPLICATION
The Central Government has prescribed a fee of Rs. 500 only for an application under section 25 of the Act in terms of Companies (Fees on Application) Rules, 1999.
STEPS PRESCRIBED FOR INCORPORATION OF A SECTION 25 COMPANIES
1. Type of section 25 company
A section 25 company, which is proposed to be registered with limited liability, may either be a public limited company or a private limited company as may be decided by the promoters.
2. Membership in a section 25 company
Section 25(4) of the Companies Act provides that a partnership firm may become a member of section 25 companies; membership of such firm shall cease upon dissolution of the firm. However, partners of the dissolved firm may continue to be the members of such company in their individual capacity.
It is advisable that the firm should obtain membership in the individual name of the partners as they may agree.
3. No requirement of minimum paid-up capital
Requirement of minimum paid-up capital of Rs. 1.00 Lac for a private limited and Rs. 5.00 Lacs for a public limited company shall not be applicable to a company registered u/s 25 of the Companies Act, 1956.
APPLICATION TO THE CENTRAL GOVERNMENT FOR ISSUANCE OF LICENCE
The power u/s 25 has been delegated to the Regional Directors of the Ministry of Company Affairs. Accordingly, the application in e-Form 24A as prescribed by the Notification No. GSR 56(E) dated 10th Feb., 2006 (previously there was no form prescribed for that purpose) for grant of permission under the section is required to be made electronically to the concerned Regional Director (Mumbai/ Kolkata/ Chennai/Kanpur), in whose jurisdiction the registered office of the company is proposed to be situated. The application should be made in conformity with the procedure laid down in the Companies Regulations, 1956 (the said Regulations).
E-Form 24A has to be submitted with following enclosures in the PDF files:
I. In case of new association
(a) Memorandum of association (MoA).
(b) Articles of association (AoA).
(c) Declaration as per annexure V of Companies Regulation Act, 1956.
(d) Declaration by advocate of Supreme Court or High Court, attorney or pleader entitled to appear before a High Court, or a company secretary or chartered accountant in whole time practice that the MoA and AoA have been drawn in conformity with provisions of the Act.
(e) Details of the promoters and of the proposed directors of the company.
(f) A list of the names, addresses, descriptions and occupations of its directors and of its managers or secretary, if any, together with the names of companies, associations and other the directors of the applicant company are directors or hold responsible positions, if any with the descriptions of the positions so held.
(g) Statement of the grounds on which application is made.
(h) If any of the above documents is not in English or Hindi, then a translation of such document in English or Hindi.
II. In case of company already registered
(a) Future annual income and expenditure estimates.
(b) Assets and liability statement with there estimated value as on seven days before making the application.
(c) Last two years' accounts, balance sheet and report on working of the association as submitted to the members of the association.
(d) Statement of brief description of the work, if already done by the association and work proposed to be done.
(e) If any of the above documents is not in English or Hindi, then a translation of such document in English or Hindi.
CONTENTS OF MEMORANDUM AND ARTICLES OF ASSOCIATION
The Memorandum of Association of a proposed company under section 25 shall be in the form set out in Annexure I of the Companies Regulations, 1956 or in a form as near thereto as circumstances admit.
However, the section 25 company may adopt the normal format for its articles as applicable in case of a public or a private company as the case may be.
Other formalities
Before sending the application to Regional Director referred, it is advisable to submit a copy of the application with all documents to the Registrar of Companies of the State in which the registered office of the proposed company will be situated or the registered office of the company is situated as the case may be, and copy of the acknowledgement received from the Registrar of Companies, should also be enclosed with the application.
Publication of notice
Before making application to the Regional Director, the applicant should publish a notice in a newspaper in the principal language of the district in which the registered office of the proposed company to be or is situated and also in an English newspaper circulating in the district.
Granting of License
The Regional Director shall, after considering the objections, if any, received within 30 days from the date of publication of the notice in the newspaper, and after consulting any authority, department or ministry, as he may, in his discretion, decide, determine whether the licence should or should not be granted.
The Regional Director may also direct the company to insert in its memorandum, or in its articles, or in both, such conditions of the licence as may be specified by him in this behalf.
FEES FOR THE APPLICATION
The Central Government has prescribed a fee of Rs. 500 only for an application under section 25 of the Act in terms of Companies (Fees on Application) Rules, 1999.
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