Section 8 Company pertains to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.
A Section 8 Company is similar to a Trust or Society; expect a section 8 Company is registered under the Central Government’s Ministry of Corporate Affairs.
Trusts and Societies are registered under State Government regulations.
A section 8 company has various advantages when compared to Trust or Society like improved recognition and better legal standing. Section 8 company also has higher credibility amongst donors, Government departments and other stakeholders.
ADVANTAGES OF SECTION 8 COMPANY
NO PAID UP CAPITAL
To register a Section 8- Company there is no need of a minimum paid up capital. Only two members are required if it is a Private Company and 7 members are required in case it is a Public Limited Company.
There are certain tax deduction to the donors of the Company associated with the Section 8 Company.
EXEMPTIONS UNDER COMPANY LAW
There are various privileges and exclusions under the Company Law. Companies Auditor is not Applicable. Stamp duty registrations are also exempted.
SECTION 8 COMPANY REGISTRATION PROCESS
OBTAINING DSC & DIN
Digital Signature Certificate (DSC) and Director Identification Number (DIN) is required for the proposed Directors of the Section 8 Company. DIN and DSC can be obtained for the proposed Directors within 5 to 7 days.
We can apply for maximum Six names of Section 8 company in order of preference while making application to Registrar of Companies (ROC). While making application we must ensure that the proposed name is not resembling or similar to any existing name of the company.
APPROVAL FOR LICENSE
Every section 8 company is required to obtain a License from the central government before filing application for registration. Only after getting the approval / license from central government, application for incorporation can be made to Registrar of Companies. Though section 8 company has limited liability, but it can’t add the word “Limited”, or as the case may be, “Private Limited” with its name.
Once DIN and DSC are available for atleast two Directors, application for reservation of name for section 8 company can be made to MCA. Once, the name is reserved, a license must be obtained prior to incorporation.
SECTION 8 COMPANY REGISTRATION
Once the license is obtained, registration documents can be submitted to the MCA along with an application for registration. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time.
Procedure of incorporation of Section 8 company is:
- Name Approval: The first step is to get the name approved by the registrar of companies. The name should not be in existence or used by any other company or firm. An application in eForm INC1 is to be made for the approval of the name.
- The memorandum and Articles of Association: After the approval of the name, it is valid for 60 days within which the company has to compile the two most important documents for registration that is the memorandum and articles of association.
- Filing of forms: The eForm INC 12 is to be filed with the registrar of companies along with the following documents which are:
- Memorandum of association and articles of association.
- A declaration of confirming the application signed by the company secretary in practice on the non judicial stamp paper of the prescribed value.
- A list of the names, addresses, description and occupations of the promoters and the board of directors of the company.
- A statement indicating the details of assets and liabilities of the company.
- An estimate of future income and expenditure of the proposed company, specifying the source of the income and object of the expenditure.
- A statement giving a brief description of the work.
- A declaration in the prescribed form on non judicial stamp paper by each person making an application.
- Clarifications: After all the papers are properly submitted and reviewed by the registrar, the registrar can ask for certain clarifications which are to be answered by the holder of power of attorney. After certain justification and enquiry, if the registrar feels satisfied he may issue the license under section 8 and then the applicant can file incorporation documents by filling certain forms.
- Certificate of Incorporation: Once the certificate is issued by the registrar, the company is deemed to be incorporated from the date of incorporation.
- Time Frame: In completing this whole process, it can take if done on a fast basis approximately 25 working days.
DOCUMENTS REQUIRED FOR THE PROCESS
Two set of below documents, Out of which one set need to be self attested whereas another set of documents need to be attested by a gazetted officer / Bank Manager / Post Master / Principal or Head Master of a School.
“Scanned Copy of the Following Documents has to be provided by the Promoters of the Company”
- PAN card copy with Self attestation.
- Latest passport size photo in jpg.
- Copy of No objection certificate from the owner of the property.
- If owned property, copy of Sale Deed and Electricity bill is sufficient.
- Voter Id copy or Passport copy or Aadhar card copy or Driving license copy with self attestation.
- Copy of Electricity bill or Property Tax receipt or Water Tax receipt not older than two months.
- Utility bill has to be provided of the particular country where the NRI or Foreign national resides and it should be notarized.
- Latest Bank account statement or Mobile /Telephone bill or Electricity Bill (not older than two months) – no need for self attestation.
- For the registered office proof of the company, if the property is rented/ leased, then copy or rental agreement or lease agreement.
- In case of NRI or Foreign national, Passport copy has to be notarized at the Indian Embassy of the particular country.
- What is section 8 company
Section 8 Company is also termed as the Non-Profit organization(NPO) which is established to promote art, science, commerce, religion, charity or any other advantageous object, provided the profits if any. Other revenue is utilized for supporting & promoting of objectives of the company and its members fund no benefit.
- How many members are required to incorporate a Section 8 Company?
It depends on the type of Company you are registering, in case you are registering a Private Company then only two members are required and if it is a Public Limited Company then it should have seven members.
- Can a Single Individual form a Section 8 Company?
No, at least two Members/Promoters are required to Incorporate a Section 8 Company.
- Is it possible to convert Section 8 Company to a Private Limited Company?
Yes, definitely it is permissible to convert Section-8 Company into Private Limited Company and related options are available for the same.
- How much time is required to register a Section 8 Company?
It is a complicated process but with the help of Quick Company it is much easier. It takes only 20-25 working days to register a Section 8 Company after the documents are submitted.
- How many Directors are required to Incorporate a Section 8 Company?
Minimum two Directors are required to Incorporate a Section 8 Company as “Private Limited” and minimum three directors if incorporated as “Public limited.”
- What are the documents required for registering Section 8 Company?
The following are the requirements:
- Copy of PAN card duly signed by the applicant
- Id Proof: Voter Id or Passport or Aadhar card or driving license. All the documents
- need to be signed by the applicant
- Address Proof: It can include latest Bank account statement or Telephone bill or
- Electricity Bill. The documents should not be older than two months
- Photo Proof(latest passport size picture)
- Office Address proof of the company is needed
- NOC (No Objection Certificate from the owner
- Copy of Sales Deed
- If the applicant is an NRI then the documents must be notarized and passport is compulsory.
- Is it permitted to register a Section-8 Company for an NRI?
Yes, an NRI can register a Section-8 Company provided all the documents required are submitted and notarized by the professionals.
- What are the benefits associated with the Section 8 Company?
There are various privileges and exclusions under the Company Law:
- There is no need of a Minimum paid-up Capital
- Stamp duty registrations are also exempted
- Companies Auditor is not applicable
- Any registered partnership firm can be a member in its individual capacity
- Tax deductions to the donors of the Company
- What words shall be the part of a section 8 company name?
The name of Section 8 Company shall include the words Federation, Chambers, foundation, Forum, Association, Confederation, council, and the like etc.
- Is it necessary to have a Charitable object to register a Section 8 Company?
It is important to have objects with non-profit motive, and then it can be registered as Section-8 Company.
- Can a body corporate or company become Director in a Section 8 Company?
No, only Individual person can become a Director in a Section 8 Company.
- Can I use “Private Limited” or “Limited” at the end of the section 8 Company name?
No, words like “Private Limited” or “Limited” should not be there in the company name, if it is a section 8 company
- Can I pay remuneration/Dividend or other benefits in money to any of the members of section 8 company?
No remuneration/dividend or other benefits shall not be given by the Section 8 Company to any of its members.
- Can a section 8 company can be amalgamated only with another company registered under section 8 and having similar objects?
Yes, company registered under Section 8 of Companies Act, 2013 can amalgamate with another company registered under Section 8 and having similar objects.
- Which are the laws that regulate the cooperative societies in India?
Laws that are regulating the Cooperative Societies in India are as follows:
- State Cooperative Societies Acts of individual states
- Multi-State Cooperative Societies Act, 2002 for the multi-state Cooperative societies including Area of operation in more than one State
- Is CSR related to Section-8 Company?
Yes, Corporate Social Responsibilities (CSR) is a part of all companies and similar to Section 8 Company it has non-profit related objectives.
- How much Paid-up capital is required?
To register Section 8 Company no paid-up capital is required.
- What are the main objectives of Section-8 Company?
The main objectives of Section 8 Company must ensure that it is related apply its profits (if any) in promoting and supporting the objectives. It should not provide any benefit/fund to its members. The objects to be promoted includes:
- Social Welfare
- Protection of Environment