Section 8 Company Registration
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Section 8 Company Registration - An Overview
A company registered under Section 8 of the Companies Act, 2013 or a company registered under Section 25 of the Companies Act, 1956 means an organisation registered for the purpose of promoting art, science, literature or sharing of knowledge or for charitable purposes. Section 8 Companies are regulated by the Companies Act, 2013. The government has given special authority to these companies under Section 8 of the Companies Act. There are three main factors for permission.
Benefits of Section 8 Company Registration
Limited Liability: Members of a Section 8 company have limited liability, meaning their personal assets are protected from the company’s debts.
No Minimum Capital Requirement: There’s no minimum capital requirement for registration, making it easier for small organizations to start.
Tax Benefits: Section 8 companies can avail various tax exemptions under the Income Tax Act, provided they meet certain criteria. Donations to these companies can also be eligible for deductions.
Credibility and Trust: Being registered as a Section 8 company adds credibility, which can enhance trust among donors, beneficiaries, and other stakeholders.
Access to Grants and Funding: Many government and private grants are available specifically for non-profit entities, which Section 8 companies can access more easily.
Perpetual Succession: The company continues to exist independently of the members. This means it can continue its operations even if there are changes in membership.
Ability to Sue and Be Sued: As a registered entity, a Section 8 company can enter into contracts, own property, and can be sued in its own name.
No Distribution of Profits: Profits generated must be reinvested in the company’s objectives, ensuring that resources are used for social causes.
Easier Compliance: Compared to other types of companies, Section 8 companies may face less stringent compliance requirements, making management simpler.
Flexibility in Management: They have the flexibility to choose their management structure and governance, allowing for tailored approaches to operations.
Section 8 Company Registration Process
1. Obtain Digital Signature Certificate (DSC)
- All proposed directors must obtain a DSC to sign electronic documents.
2. Apply for Director Identification Number (DIN)
- Each director needs a DIN, which can be applied for online through the Ministry of Corporate Affairs (MCA) portal.
3. Name Reservation
- Propose a unique name for your Section 8 company. You can submit up to six names, which will be checked for availability.
- Use the RUN (Reserve Unique Name) form on the MCA portal for this step.
4. Drafting the Memorandum and Articles of Association
- Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) outlining the company’s objectives, governance, and rules.
- Ensure that these documents reflect the non-profit nature of the organization.
5. Filing with the Registrar of Companies (ROC)
- Submit the application in Form INC-12 along with the required documents, including:
- MOA and AOA
- Declaration from directors
- Details of the proposed directors and shareholders
- Estimated annual income and expenditure
- Other relevant documents (like address proof, identity proof)
6. Payment of Fees
- Pay the registration fee as prescribed under the Companies (Registration Offices and Fees) Rules, 2014.
7. Obtain Certificate of Incorporation
- After the ROC reviews the application and documents, you will receive the Certificate of Incorporation if everything is in order.
8. Apply for Section 8 License
- After incorporation, apply for a license under Section 8 of the Companies Act, 2013, which allows you to operate as a non-profit.
- This can be done by submitting Form INC-13, along with supporting documents.
Name Approval of Section 8 Company Registration
The registered name of a company as specified in Section 8 should be short, simple and specific, containing the facts indicating the meaning of the NGO etc. Registration and approval of the company name is required. This helps in avoiding legal issues and ensures that no other company listed under Section 8 is registered under the same name. In order to obtain approval, the INC-1 application form needs to be submitted to the Registrar of Companies (Central Registry – CRC of the Ministry of Corporate Affairs). Applicants need to submit six unique names for name approval to reduce duplicate names. Once approved the name is valid for up to 60 days. According to the Companies (Companies) Regulations 2014 the application name must contain the basic words like establishment, forum, council, business unit etc. Article 8 company name.
Annual Compliances of Section 8 Company
Section 8 companies in India have specific annual compliance requirements to ensure transparency and adherence to regulatory standards. Here’s a breakdown of the key annual compliances:
1. Filing of Annual Returns
- Form MGT-7: This form must be filed with the Registrar of Companies (ROC) within 60 days from the date of the annual general meeting (AGM). It provides details about the company’s shareholders, directors, and other important information.
2. Filing of Financial Statements
- Form AOC-4: Section 8 companies must file their audited financial statements with the ROC within 30 days of the AGM. This includes the balance sheet, profit and loss account, cash flow statement (if applicable), and auditors’ report.
3. Holding Annual General Meeting (AGM)
- Section 8 companies are required to hold an AGM every year. The first AGM must be held within nine months from the end of the first financial year, and subsequent AGMs should be held within six months of the end of the financial year, ensuring that not more than fifteen months elapse between two AGMs.
4. Maintenance of Minutes Book
- The company must maintain a minutes book to record the proceedings of the AGM and board meetings. This book should be signed by the chairman of the meeting.
5. Board Meetings
- Hold at least four board meetings in a financial year, with a maximum gap of 120 days between two meetings. Proper minutes of these meetings must be maintained.
6. Statutory Registers
- Maintain statutory registers, including:
- Register of Members
- Register of Directors and Key Managerial Personnel
- Register of Charges
7. Compliance with Income Tax
- File income tax returns annually, ensuring compliance with the Income Tax Act. If eligible, apply for tax exemptions under relevant sections (e.g., 12A, 80G) for donations.
8. Renewal of Licenses and Registrations
- Ensure that all necessary licenses (like GST registration, if applicable) are renewed and comply with their respective regulatory requirements.
Purpose of NGO Section 8 Company Meaning
Non-Governmental Organizations (NGOs) are non-profit, independent organizations of government. NGOs are often involved in social welfare activities such as poverty alleviation, education, and health care. A profitable company.
Key Points about Section 8 Company
1. Purpose
- Section 8 companies are established for promoting charitable objectives, including social welfare, education, art, culture, science, religion, and environmental protection.
2. Non-Profit Nature
- These companies cannot distribute profits to members. Any surplus generated must be reinvested in the company’s objectives.
3. Limited Liability
- Members enjoy limited liability, meaning their personal assets are protected from the company’s debts.
4. Minimum Requirements
- A minimum of two members and two directors (with at least one being a resident of India) is required for incorporation.
5. No Minimum Capital Requirement
- There is no stipulated minimum capital for starting a Section 8 company, making it accessible for small organizations.
6. Registration Process
- Registration involves obtaining a Digital Signature Certificate (DSC), Director Identification Number (DIN), reserving a unique name, and filing necessary documents with the Registrar of Companies (ROC).
7. Tax Benefits
- Section 8 companies can avail tax exemptions under the Income Tax Act, and donations made to them may be eligible for deductions under certain sections (like 80G).
8. Perpetual Succession
- Section 8 companies have perpetual succession, meaning they continue to exist independently of changes in membership.
9. Regulatory Compliance
- They must comply with the provisions of the Companies Act, 2013, including annual filings, maintenance of books, and conducting board meetings.
10. Credibility
- Being a registered Section 8 company enhances credibility, making it easier to attract donations, grants, and partnerships.
Online Section 8 Company Registration In Three Steps
Registering a Section 8 company online in India can be streamlined into three main steps:
Step 1: Obtain DSC and DIN
Digital Signature Certificate (DSC):
- All proposed directors must obtain a DSC, which is required for signing electronic documents.
- You can apply for a DSC through various certifying agencies. The process usually involves submitting identity proof, address proof, and a photograph.
Director Identification Number (DIN):
- Each proposed director must apply for a DIN, which can be done through the MCA portal.
- This application can be submitted along with the DSC application or separately using Form DIR-3.
Step 2: Name Reservation and Incorporation Application
Name Reservation:
- Use the RUN (Reserve Unique Name) form on the MCA portal to propose a unique name for your Section 8 company.
- You can submit up to six names, and the name must reflect the charitable nature of the organization.
Incorporation Application:
- Once the name is approved, prepare the necessary incorporation documents:
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Declaration by the directors
- File Form INC-12 for registration along with the MOA, AOA, and other required documents through the MCA portal.
- Once the name is approved, prepare the necessary incorporation documents:
Step 3: Apply for Section 8 License
- Obtain License:
- After receiving the Certificate of Incorporation, apply for a license under Section 8 of the Companies Act by submitting Form INC-13 on the MCA portal.
- Include all supporting documents that demonstrate your non-profit objectives and activities.
Section 8 Company Registration FAQ's
A Section 8 company is a non-profit organization registered under the Companies Act, 2013, that aims to promote charitable objectives such as education, social welfare, art, culture, and environmental protection.
Key advantages include limited liability for members, tax benefits, credibility, and access to grants and funding.
A minimum of two directors and two members is required for incorporation, with at least one director being a resident of India.
No, there is no minimum capital requirement for starting a Section 8 company.
The registration process can take anywhere from a few days to a few weeks, depending on the completeness of your application and the processing time at the Registrar of Companies (ROC).
Required documents include:
- Identity and address proof of directors
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Address proof of the registered office
- Declaration from directors
Yes, a Section 8 company can generate profits, but these profits must be used solely for promoting its objectives and cannot be distributed to members.
Yes, Section 8 companies can avail tax exemptions under the Income Tax Act, and donations made to them may be eligible for deductions under sections like 80G.
Annual compliance includes filing annual returns (Form MGT-7), financial statements (Form AOC-4), conducting annual general meetings (AGMs), and maintaining statutory registers.
Yes, a Section 8 company can be converted into a private or public company, but this requires compliance with certain procedures and approvals.
Non-compliance can result in penalties, fines, or even deregistration. It’s essential to adhere to all statutory requirements.
Yes, Section 8 companies must have their financial statements audited annually, regardless of their revenue.