Procedure for the incorporation of Non-profit Oriented Company/ Sec 25 Company

Procedure for the incorporation of Non-profit Oriented Company/ Sec 25 Company

Introduction:

For incorporating a non – profit oriented company, the following three conditions must be satisfied as per Section 25 of the Companies Act, 1956:

i)                    The Company must be formed for promoting commerce, art, science, religion, charity or other useful object,

ii)                  The Company should apply its profits, if any, or other income in promoting the objects, and

iii)                And should prohibit the payment of any dividend to its members.

The proposed Company, at the outset, have to obtain licence from the Central Government (now delegated to concerned Regional Director of the region) and then the Company may be incorporated with the Registrar of Companies.

The detailed procedure relating to same, is as follows:

Procedure:

i)              Three copies of the draft Memorandum and Articles of Association

ii)            A declaration on non-judicial stamp paper by a Company Secretary in Practice to the effect that he has Memorandum and Articles have been drawn up in conformity with the provisions of the Act and that all requirements of the Act and rules have been duly complied with.

iii)          3 copies of a list of the names, descriptions, addresses and occupations of the promoters as well as members of the proposed Board of Directors.

iv)          A statement showing in detail the assets (with estimated values) and liabilities of the association as on the date of application or within 7 days of that date.

v)            An estimate of future annual income and expenditure of the Company, specifying the sources and objects of expenditure.

vi)          A statement showing brief description of the work already done, and of the work proposed to be done.

vii)        A statement specifying grounds of application

viii)      A declaration by each person making the application in the form set out in Annexure V.

ix)          Demand Draft for Rs. 500/- in favour of ‘Pay and Accounts Officer, Department of Company Affairs’ payable at Chennai (or a Treasury Challan may be obtained from the specified branches of Punjab National Bank).

Note: If any document is not English or Hindi – translation thereof, in English or Hindi, certified by the Promoter or the Director.

8.                        i)             The Registrar of Companies, on receipt of the application, gets them thoroughly scrutinised and list out modification in the Memorandum and Articles, and forward the same to the Regional Director, within 15 days of the receipt of the copies.

ii)      The RoC, will also indicate in his report whether there are other with similar objects.

iii)          The RoC, also might have some personal knowledge of the promoters and members of the Board, and he normally advices to R.D whether or not to grant a licence.

iv)          In certain circumstances, the RoC may refer the case to the District Magistrate.

Note: Memorandum and Articles need not be stamped.