Associations established for promoting commerce, art, science, religion,
charity or any other useful object can also be registered as limited
company under section 25 of the Companies Act, 1956. The Companies
Act, 1956 is a central statute applicable to whole of India. Unlike
the Societies Registration Act, the State Government do not have
the power to frame any supplementary legislation to regulate the
companies. Therefore, the regulatory authority law and procedure
are uniform throughout India.
The Central Government is empowered under the provisions
of Companies Act to grant licence to associations/
companies which to its satisfaction :
intend to promote commerce, art, science,
religion, charity or any other useful object, and
intends
to apply its profits or other income for promoting its
objects, and to prohibit payment
of any dividend to its members,
Such
associations which are granted licence under section
25 are allowed to be registered as companies
with limited liability without the addition to their
name the words ‘Limited’ or Private Limited’.
If the Central Government is satisfied that an exiting
company meets the above two clauses, then it can permit
the company to omit the word ‘Limited’ or ‘Private
Limited’ from its existing name.
Procedure for
1. Grant of licence under section 25 and Registration
as Company for New Associations
2. Grant of licence to an existing limited company.
A ) Procedure for grant of licence under
section 25 and Registration as Company for New Associations
(Rule 1 to 19
of Companies Regulation 1956)
Availability of Name
First of all, an application for availability of name
in Form 1 A is
to be made to the Registrar of Companies along with
a fee of Rs. 500/-. In this application, suitable names
(not less than four) for the organisation in order
of preference are to be given for obtaining approval.
Out of the four proposed names, one will be main and
other three to be mentioned in order of preference.
While selecting names care should be taken to avoid
names which resemble too closely or are the same as
the names of any other company already registered.
The application is to be made to the Registrar of
Companies of the State in which the proposed company
is to be incorporated to ascertain which of the names
proposed in Form
No. 1 A are available. The payment of fee of Rs.500/-
should be made in cash to the Registrar of Companies.
Normally, the Registrar will inform about the availability
of the desired name within 7 days of the receipt of
application. For addresses of Registrar of Companies,
click here.
After information from the Registrar of Companies
that the proposed name is not undesirable, such name
shall be available for adoption by the company for
a period of six months, from the date of intimation
by the Registrar. However, if the name is not available,
the promoters will have to apply again to the Registrar
of Companies selecting fresh names in Form
No. 1 A with required application fee.
(As per Rule 4A of the
Companies (Central Governments) General Rules and Forms, 1956.
Preparation of Memorandum and Articles of
Association
After the name of the company is approved by the
Registrar of Companies, the Memorandum and Articles
of Association are prepared. For companies desirous
of obtaining licence under section 25, a format for
Memorandum of Association has been specifically provided
in Annexure 1 of
the Companies Regulations, 1956. Regulation 6 of
Companies Regulations, 1956 provides that the Memorandum
of Association of the proposed company shall be in
the form specified in Annexure I or in a form near
thereto as circumstances admit.
A specimen format of Articles of Association is provided
here (Click here)
It is advisable to have the draft Memorandum and Articles
of Association scrutinized by a solicitor, a company
secretary or a chartered accountant practicing in India.
Do not get the Memorandum and Articles of Association
printed before vetted by Regional Director.
It should be made sure that one of the promoter is
kept as the subscriber to the Memorandum and Articles
of Association of the proposed company.
Application for licence
After preparation of Memorandum and Articles of Association,
an application to the Regional Director at Mumbai/Calcutta/Kanpur/Chennai,
requesting for issue of a licence under section 25
is to be made. Click
here for the addresses and areas of jurisdiction of
the Regional Directors.
The application in the form of covering letter shall
be accompanied by following documents. For a specimen
format of covering letter, Click
here.
(i) three draft copies of the memorandum and articles
of association of the proposed company. The memorandum
and articles of association should be type written.
They should be printed after having been approved by
the Regional Director.
(ii) a declaration (on non-judicial stamp paper)
signed by
• an
advocate of the Supreme Court or of a High Court, or
• an
attorney or a pleader entitled to appear before a High Court or
• a
Company Secretary, or a Chartered Accountant in whole time practice in India,
that the memorandum and articles of association have been drawn up
in conformity with the provisions of the Act and that all the requirements
of the Act and the Rules made there under have been duly complied with.
For specimen declaration, click
here.
(iii) three copies of a list of the names, descriptions,
addresses and occupations of the promoters (and where
a firm is a promoter, of each partner in the firm),
as well as of the members of the proposed board of
directors, together with the names of companies, associations
and other institutions, in which such promoters, partners
and members of the proposed board of directors are
directors or hold responsible positions, if any, with
descriptions of the positions so held;
(iv) if the association is one which is already in
existence, three copies of the following documents
submitted by the management thereof to its members,
for each of the two complete financial years immediately
preceding the date of the application, or where the
association has functioned only for one such financial
year, for such year:
(a)
the accounts,
(b)
the balance sheets, and
(c)
the reports on the working of the association;
a statement showing in detail the assets (with the
estimated values thereof) and the liabilities of the
association, as on the date of the application or within
seven days of that date;
(v) an estimate of the future annual income and expenditure
of the proposed company, specifying the sources of
the income and the objects of the expenditure;
(vi) a statement giving a brief description of the
work, if any, already done by the association and of
the work proposed to be done by it after registration
in pursuance of section 25;
(vii) a statement specifying briefly the grounds
on which the application is made,
(viii) a declaration (on non-judicial stamp paper)
by each of the promoters (persons making the application)
in the form prescribed in Annexure
V of the Companies Regulations 1956 or in a form
as near thereto as circumstances admit.
(ix) A treasury challan or demand draft showing the
necessary fee has been deposited. The fee for making
the application to the Regional Director is Rs. 500/-.
(x) a letter of authority given by the person making
the application in favour of any other person to make
necessary corrections or alterations as may be required
by the Regional Director, in any documents filed with
him.
If
payment is made by way of demand draft, then demand
draft should be drawn in favour of “Pay and accounts
Officer, Department of Company Affairs”, Mumbai
or Kolkata or Chennai as the case may be and payable
at Mumbai or Kolkata or Chennai. For payment of application
fee by way of demand draft to the Regional Director,
Northern Region, Kanpur, draw the demand draft in favour
of “Regional Director, N.R. Department of Company
Affairs, Kanpur”, and payable at Kanpur.
If payment is made by way of treasury challan, then
obtain three copies of the treasury challan from the
specified branches of the Punjab National Bank and
fill the details and deposit along with the fee to
the said branch of the bank. Two copies of the challan
will be given back to the deposited one of which should
be sent to the Regional Director.
If any documents required above are not in English
or in Hindi, a translation of that document either
in English or in Hindi certified to be correct by any
promoter or proposed director, or in the case of an
association which is already in existence, by any member
of its executive or governing body, shall be furnished
to the Regional Director together with the document.
Application to Registrar of Companies
Simultaneously with the application made to Regional
Director, the applicant shall furnish a copy of the
application with all its enclosures to the Registrar
of Companies of the state in which the registered office
of the proposed company is to be or is situate. For
addresses of Registrar of Companies, click here.
Notice to be Published in Newspaper
Within one week of making application to the Regional
Director a notice about making the application to Regional
Director is required to be published in newspaper.
The said notice shall be in the form set out in Annexure
II of the Companies Regulation, 1956, or in a form
as near thereto as circumstances admit.
The notice shall be published in one English newspaper
and one vernacular newspaper of the local area in which
the Registered Office is situated
A certified copy of this notice shall be sent to the
Regional Director.
Granting of Licence under section 25 of the
Companies Act
After receipt of copy of application, the Registrar
of Companies will list out the modifications in the
draft memorandum and Articles of Association and forward
the same to the Regional Director within 15 days of
the receipt. On the basis of his knowledge of the promoters
and proposed members of the board of directors, Registrar
of Companies normally advises the Regional Director
whether or not the proposed company should be granted
a licence. He may also indicate in his report whether
there are other companies in existence with similar
objects in or near the place where the company would
be situated and whether the proposed company is really
necessary. Registrar of Companies may also consult
the District Magistrate of the State concerned.
On receipt of the report of the Registrar of Companies,
the applicant may be asked to modify the drafts in
light of the scrutiny made by the Registrar of Companies
and the departmental officers.
The Regional Director shall, after considering the
objections, if any, received by it within the time
fixed there for in the notice, and after consulting
any authority, Department, Ministry or Registrar of
Companies, as it may, in its discretion, decide, determine
whether the licence should or should not be granted.
The licence from Regional Director shall be in the
form specified in Annexure
III or in a form as near thereto as circumstances
admit.
The Regional Director may also direct the company
to insert in its memorandum, or in its articles, or
partly in the one and partly in the other, such conditions
of the licence as may be specified by the Regional
Director in this behalf.
Registration as company
After obtaining licence, the Memorandum and Articles
of Association, as approved by the Regional Director
should be printed. Care should be taken to see that
such conditions of the licence as directed by the Regional
Director are inserted.
After the licence is granted by Regional Director, the following documents
should be filed with the Registrar of Companies for the incorporation
of company within six months from the date of receipt of availability
of name letter from Registrar of Companies:
(i) Printed copy of the memorandum and articles of
association. No stamp duty is payable on the Memorandum
and Articles of Association of a company to be registered
under the provision of this section.
(ii) Declaration of compliance in Form
No.1 by an advocate of the Supreme Court or of
a High Court, or an attorney or a pleader entitled
to appear before a High Court or a Company Secretary,
or a Chartered Accountant in whole time practice
in India, or by a person named in the Articles as
a director, manager or secretary of the company that
all the requirements of the Companies Act 1956, and
the rules thereunder have been complied with in respect
of registration and matters precedent and incidental
thereto.
(iii) Notice of the situation of the registered office of the company
in Form No. 18
(iv) Particulars of directors, manage or secretary
in Form No. 32 in
duplicate
(v) Copy of agreement if any, which the proposed company
wishes to, enter into with any individual for appointment
as its managing or whole-time director or manager.
(vi) a declaration (on non-judicial stamp paper of
requisite value) in favour of one of the subscribers
to the memorandum and articles of association or any
other person authorizing him to file the documents
and papers for registration and make necessary corrections,
if any.
(vii) Original copy of the Registrar of Companies
letter intimating about the availability of name.
(viii) Copy of the licence granted by the Regional
Director
(ix) requisite fee as prescribed.
The
Registrar of Companies, on having made the necessary
scrutiny and corrections, will issue the certificate
of incorporation and the company will come into force
from the date thereof without the words “Public
Limited” or “Private Limited”
B) Company already registered under Companies
Act wants to apply for licence under section 25
(Rule 1 to 19 of Companies Regulation
1956)
Change the Memorandum and Articles of Association
First of all, the existing company has to change its
Memorandum and Articles of Association to bring them
in conformity with the provisions of section 25. For
companies desirous of obtaining licence under section
25, a format for Memorandum of Association has been
specifically provided in Annexure
1 of the Companies Regulations, 1956. Regulation
6 of Companies Regulations, 1956 provides that the
Memorandum of Association of the proposed company shall
be in the form specified in Annexure I or in a form
near thereto as circumstances admit.
A specimen format of Articles of Association is provided
here (Click here)
It is advisable to have the draft Memorandum and Articles
of Association scrutinized by a solicitor, a company
secretary or a chartered accountant practicing in India.
Application for licence
An application to the Regional Director at Mumbai/Calcutta/Kanpur/Chennai,
requesting for issue of a licence under section 25
is to be made. Click
here for the addresses and areas of jurisdiction
of the Regional Directors.
The application in the form of covering letter shall
be accompanied by following documents. For a specimen
format of covering letter, click
here.
(i) three copies of the printed or type written copies
of the memorandum and articles of association of the
proposed company.
(ii) three copies of a list of the names, descriptions,
addresses and occupations of its directors and manger
or secretary, together with the names of companies,
associations and other institutions, in which the directors
of applicant company are directors or hold responsible
positions, if any, with descriptions of the positions
so held;
(iii) Three copies of the following documents submitted
to the company in annual general meeting for each of
the two financial years preceding the date of the application,
or when the association has functioned only for one
such financial year, for such year:
(a) the profit and loss account,
(b) the balance sheets, and
(c) the annual report of the board of directors and
(d) the audit reports
(iv) a statement showing in detail the assets (with
the estimated values thereof) and the liabilities of
the association, as on the date of the application
or within seven days of that date;
(v) an estimate of the future annual income and expenditure
of the proposed company, specifying the sources of
the income and the objects of the expenditure;
(vi) a statement giving a brief description of the
work, if any, already done by the association and of
the work proposed to be done by it after registration
in pursuance of section 25;
(vii) a statement specifying briefly the grounds on
which the application is made, and
(viii) a declaration (on non-judicial stamp paper)
by each of the promoters ( persons making the application)
in the form prescribed in Annexure
V of the Companies Regulations 1956 or in a form
as near thereto as circumstances admit.
(ix) A treasury challan or demand draft showing the
necessary fee has been deposited. The fee for making
the application to the Regional Director is Rs. 500/-.
(x) a letter of authority given by the person making
the application in favour of any other person to make
necessary corrections or alterations as may be required
by the Regional Director, in any documents filed with
him.
If
payment is made by way of demand draft, then demand
draft should be drawn in favour of “Pay and accounts
Officer, Department of Company Affairs”, Mumbai
or Kolkata or Chennai as the case may be and payable
at Mumbai or Kolkata or Chennai. For payment of application
fee by way of demand draft to the Regional Director,
Northern Region, Kanpur, draw the demand draft in favour
of “Regional Director, N.R. Department of Company
Affairs, Kanpur”, and payable at Kanpur.
If payment is made by way of treasury challan, then
obtain three copies of the treasury challan from the
specified branches of the Punjab National Bank and
fill the details and deposit along with the fee to
the said branch of the bank. Two copies of the challan
will be given back to the deposited one of which should
be sent to the Regional Director.
If any documents required above are not in English
or in Hindi, a translation of that document either
in English or in Hindi certified to be correct by any
promoter or proposed director, or in the case of an
association which is already in existence, by any member
of its executive or governing body, shall be furnished
to the Regional Director together with the document.
Application to Registrar of Companies
Simultaneously with the application made to Regional
Director, the applicant shall furnish a copy of the
application with all its enclosures to the Registrar
of Companies of the state in which the registered office
of the proposed company is to be or is situate. For
addresses of Registrar of Companies, click
here.
Notice to be Published in Newspaper
Within one week of making application to the Regional
Director a notice about making the application to Regional
Director is required to be published in newspaper.
The said notice shall be in the form set out in Annexure
II of the Companies Regulation, 1956, or in a form
as near thereto as circumstances admit.
The notice shall be published in one English newspaper
and one vernacular newspaper of the local area in which
the Registered Office is situated
A certified copy of this notice shall be sent to the
Regional Director.
Granting of Licence under section 25 of the
Companies Act
After receipt of copy of application, the Registrar
of Companies will list out the modifications in the
draft memorandum and Articles of Association and forward
the same to the Regional Director within 15 days of
the receipt. On the basis of his knowledge of the promoters
and proposed members of the board of directors, Registrar
of Companies normally advises the Regional Director
whether or not the proposed company should be granted
a licence. He may also indicate in his report whether
there are other companies in existence with similar
objects in or near the place where the company would
be situated and whether the proposed company is really
necessary. Registrar of Companies may also consult
the District Magistrate of the State concerned.
On receipt of the report of the Registrar of Companies,
the applicant may be asked to modify the drafts in
light of the scrutiny made by the Registrar of Companies
and the departmental officers.
The Regional Director shall, after considering the
objections, if any, received by it within the time
fixed there for in the notice, and after consulting
any authority, Department, Ministry or Registrar of
Companies, as it may, in its discretion, decide, determine
whether the licence should or should not be granted.
The licence from Regional Director shall be in the
form specified in Annexure
III or in a form as near thereto as circumstances
admit.
The Regional Director may also direct the company
to insert in its memorandum, or in its articles, or
partly in the one and partly in the other, such conditions
of the licence as may be specified by the Regional
Director in this behalf.
Registration of Company
After receipt of the licence under section 25, the
same should be produced to the concerned Registrar
of Companies alongwith an application requesting him
to issue a fresh certificate of incorporation in the
changed name.
On
issue of such fresh certificate of incorporation,
the new name without the word “limited” or
the words “private limited’ will become
effective and operative.
