Section 8 Company REGISTRATION
A Section 8 Company is a non-profit organization that aims to promote charitable activities, art, science, education, and sports. The profits of such companies are utilized for promoting these objectives and are not distributed among the Company's members.
A Section 8 company registration under the Companies Act, 2013 or a Section 25 Company as per the Companies Act,1956 is an organisation registered with an objective of promoting the fine arts, science, literature, or knowledge sharing for a purposeful matter or for charity. Section 8 companies are regulated through the Companies Act, 2013. These are the limited companies established under the Companies Act. The Government grants these companies an exclusive license under Section 8 Companies Act. There are three main conditions for granting the license.
1. The company should be registered for charitable purposes
2. Income and profits should be used towards these objects
3. The company should not pay any dividend to its members.
Definition of Section 8 Company – Companies Act, 2013
According to the Companies Act 2013, a Section 8 company is defined as an organization whose objectives are to promote arts, commerce, science, research, education, sports, charity, social welfare, religion, environmental protection, or other similar activities goals. These entities utilize their profits to achieve their mission and do not distribute dividends to their shareholders.
Functions of Registering a Section 8 Company
There are several functions associated in incorporating a section 8 company and they are as follows.
1. No minimum paid up capital required. Therefore, you can guess one of the benefits of section 8 companies is that you can set it up even if you don’t have money.
2. The company objectives must be to promote social welfare activities. Keep in mind that there are no directives of a state. Thus, the rules of NGO registration in Delhi are the same as everywhere else in India.
3. There is no requirement of stamp duty.
4. Under the income tax act, there are certain tax deductions given to a Section 8 company.
5. A company has clear objectives that allow them to gather donations easily.
6. It can be managed easily due to several privileges that it is given.
7. As this entity is a company, a company minimum member count is 2 directors and 2 shareholders. It is an important infrastructural aspect that you must fulfill to get NGO registration under section 8.
Key Features of Section 8 Company:
1. Non-Profit Business
2. Section 8 Objects
3. Licenced by Central Government
4. Online Registration
5. Quick & Affordable Incorporation
Documents Required to Register a NGO Section 8 Company.
To Register a Private Limited, following documents are required for directors -
For Directors -
1. Copy of Adhaar card.
2. Copy of PAN card.
3. Email Address & Contact No.
4. Passport Size Photo.
5. Updated bank Statement (Saving A/c).
For Office Address -
1. Electric Bill of office Address
2. Rent Agreement of office, If Any
3. NOC by Office Owner
Incorporation of a Section 8 Company
The Companies Act, 2013 deals with the procedure of Incorporation of a Section 8 Company and as per this section, an application in Form No. INC.12 has to be submitted along with the below-mentioned documents to the Registrar of Companies.
1. Form no. INC – 13 – Company’s Draft Memorandum of Association (MOA) and Articles of Association (AOA) in Form No. INC – 13 (as specified in Act) along with the affixation of subscribers’ photographs.
2. Form no. INC-14 – A Declaration is to be affixed in Form no. INC-14 that the draft MOA & AOA are compliant with the provisions & norms of Section 8 and the requirements as per Section 8 have been duly taken care of.
Note: The declaration has to be made on stamp paper & should be notarized by an Advocate, a Company Secretary, a Chartered Accountant or a Cost Accountant, practising the profession.
3. Form no. INC-15 – A declaration in Form No. INC-15 on stamp paper & notarized by each member of the company who is applying.
4. Form no. INC-9 – Form no. INC-9 form first directors as well as each subscriber, on the relevant State’s stamp paper and appropriately notarized.
An estimation of the company’s future annual income and expenditure for the next three years, mentioning the sources of the income and the purpose of the expenditure.
Mandatory legal requirements for Section 8 Company
Before applying for the incorporation process of a Section 8 company in India, specific legal requisites must be fulfilled. These requirements are as follows:
1. Number of Directors- A minimum of two directors is required if the Section 8 entity intends to operate as a private limited company. However, a minimum of three directors are required if the entity aims to operate as a public limited company.
2. Number of Members- If the Section 8 Company aims to function as a private limited company, the number of members is capped at 200 by the Ministry of Corporate Affairs (MCA). However, there is no such limit for Section 8 entities with a business structure like a public limited company.
3. Capital Requirement and Name- According to the Companies Act 2013, Section 8 entities are not required to maintain a minimum paid-up capital. Moreover, NGOs operating as Section 8 entities are not obligated to affix terms like private limited or limited in their name.
4. Company Objects- Only entities with non-profit objectives are eligible for Section 8 registration. The Memorandum of Association and Articles of Association must clearly state such goals for which the Company is established. Any profits the Section 8 entity generates must be utilized for charitable purposes or reinvested in the entity. The profit of Section 8 entities is not available to its members in any form. These legal requisites ensure that Section 8 companies operate with transparency and the intended purpose of promoting social welfare.
Most Important Advantages for the Incorporation of Section 8 Company
1. Through building the section-8 company the intention or goal of the company would perform any activity and obtain integrity and commitment because the same is being approved made through the Union government.
2. Towards operations because of its strict rules, the same poses a trustful image in front of internal and external users of the details with respect to the communities.
3. The reliability of section 8 company has much more with respect to the communities and the additional kinds of charitable firms.
4. Grants and subsidies via the government and the additional institutions were acknowledged to the section-8 company according to the communities of trust.
Checklist & Documents Required for Section 8 Company Registration
To register Section 8 company in India, certain eligibility criterias must be met beforehand. Section 8 Company eligibility criteria depends on the type of structure opted for incorporation. These companies could either be incorporated as Private Limited or Public Limited Companies.
However, both these structures require different criterias to be met. Additionally, Section 8 Company Registration process is incomplete without the submission of proper documents. In the table below, we have listed both the eligibility criteria and Section 8 Company documents required in India. This will help you navigate the Section 8 Company Registration process better.
Process for Registering a Section 8 Company in India
The following process can be utilised for registering a section 8 company in India:
1. Prepare DSC and file Name Approval- The very first step for Section 8 company registration is to prepare DSC. Apply for Digital Signature Certificate (DSC) as soon as possible. Section 8 companies should contain words like Foundation, Society, Association, Council, Club, charities, Academy, organisation, Federation, Institute, Chamber of Commerce, Development and many more.
2. Filing of Section 8 Incorporation Forms on MCA Portal- After getting approval from the regional director, we will proceed to file the section 8 company registration application with the requisite documents before ROC. Once all clarifications are provided to ROC, the ROC shall issue a Certificate of Incorporation along with a Company Identification Number (CIN). This would be carried out as per the requirements under SPICE plus (Spice +)
3. MoA and AoA file submission- Once you get the License, you need to draft the Memorandum of Association (MoA) and Article of Association (AoA) to file section 8 company registration applications.
4. PAN, TAN and Bank Account- You must have your PAN, TAN and bank account ready while going for Section- 8 Company registration in India.
Section 8 company registration in India is a class by itself. It is a non- profit organisation engaged in the social work for the welfare of the society and the country.
Section 8 company registration procedure is as follows-
1. Prepare DSC and file Name Approval- The very first step for Section 8 company registration is to prepare DSC. Apply for Digital Signature Certificate (DSC) as soon as possible. Section 8 companies should contain words like Foundation, Society, Association, Council, Club, charities, Academy, organisation, Federation, Institute, Chamber of Commerce, Development and many more.
2. Apply for Section 8 Company registration license from Regional Director, MCA (INC-12)- After Name approval, we will apply for Section 8 company registration license from Regional director. The regional director will review the objectives, plans and will grant a permit for Section 8 Company registration. RD usually takes 15 days to issue a license to operate as a section 8 company.
3. Filing of Section 8 Incorporation Forms on MCA Portal- After getting approval from the regional director, we will proceed to file the section 8 company registration application with the requisite documents before ROC. Once all clarifications are provided to ROC, the ROC shall issue a Certificate of Incorporation along with a Company Identification Number (CIN).
4. MoA and AoA file submission- Once you get the License, you need to draft the Memorandum of Association (MoA) and Article of Association (AoA) to file section 8 company registration applications. The Object of the company will be detailed in the MoA and the rules, and the by-laws will be mentioned in the AoA.
5. PAN, TAN and Bank Account- You must have your PAN, TAN and bank account ready while going for Section- 8 Company registration in India.
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