Section 25 Company

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Bharat Kapoor (Querist)

30 June 2010 A company has to convert its one project into Section 25 company as per agreement executed between company & governmen.

My query is whay & what is the best option available to the company:

1) whether the company demerge its said project and convert the same into section 25 company
2) whether form new section 25 company and transer/sale the said project to such new section 25 company.

Also inform about the procedure, advantages & disadvantage for above both options.

Please it is very urgent

Rasesh

Rasesh (Expert)

30 June 2010 Demerger will take a long time (approx 6 months), expensive (legal expenses), and then getting the resulting company registered as Sec 25 Company would also be difficult. Moreover, demerger will also not have any rationale.

A better and easier course of action would be to have a new sec 25 company and get the project / assignment transferred to it.

Bharat Kapoor

Bharat Kapoor (Querist)

30 June 2010 Thanks for your reply. Could you please inform about
1) the procedure of formation
2) privilegs & obligation of Section 25 company

Rasesh

Rasesh (Expert)

30 June 2010 There is one good file submitted by Radhika, club member. Please find link:

https://www.caclubindia.com/share_files/details.asp?mod_id=4606

This will help. As regards, obligations, there are no such obligatons under the act. The RD will however, specify the same.
There are many benefits as many provisions of the act are not required to be complied with. I will try to compile and provide a list.

Bharat Kapoor

Bharat Kapoor (Querist)

30 June 2010 Thanks

Vishal Dang

Vishal Dang (Expert)

01 July 2010 Dear Bharat

before proceeding further please confirm that the agreement executed between company and the govt. gives the permission to incorporate a new company or not for the said project.

Regards

Vishal

Bharat Kapoor

Bharat Kapoor (Querist)

04 July 2010 There is no such condition in the agreement.

Rasesh

Rasesh (Expert)

05 July 2010 In my view, no such provision is required in the agreement.

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