Registration of Section 8 Company
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When we look at the records, on daily basis there are number of companies that being registered and are running successfully and making profit out of them. Not every company has an objective to earn profit but there are also some companies which do not have any motive to earn profit but to work for the social causes. These type of entities are known to be as Non-Profit organisation.
In India, a Non-profit organisation can be registered in only three categories, namely –
- Section 8 Companies
There is no such central law to that governs the Trusts, they are governed under state law. Societies are governed under Societies Act 1860; while Section 8 companies are governed under Companies Act, 2013.
For registering any such Non-Profit Organisation, Section 8 Companies are best to go with. These are registered under Companies Act 2013 with a sole objective of social welfare only without taking any profit out of them.
A Section 8 Company has the main objective of promotion of science, art, commerce, sports, charitable activities, etc.
SECTION 8 COMPANIES – at glance
The section 8 companies are registered under Section 8 of Companies Act 2013, previously these were covered under section 25 of Companies Act 1956. Non-profit Organisations registered under Section 8 have a sole objective to promote and work under the areas of arts, commerce, science, healthcare, research, education, sports, environment protection, social welfare, religion, environment protection, etc.
The profit made under these companies can’t be utilised for the personal welfare, it can be only used to promote their objectives mentioned in the company.
Features of Section 8 Company -
- Better Credibility
- Government privileges
- No minimum share capital
- Perpetual existence
- Separate legal status
- Limited liability
- Central government license
- Attracts donations
- Can take income tax benefit under Income Tax Act
- Minimum two person are required for the registration.
- Minimum one of the directors should be an Indian resident.
- The of the company must be as per the companies Act 2013
- The objective should not include any profit based activities
- Founders, members, and directors of the company cannot take the dividend.
- No profit should be distributed among the members and director
- Name of the Section 8 company must contain “foundation” or “association”
Documents required -
- PAN Card from all Directors
- ID proof from the directors (Driving License/ voter ID/Passport)
- Bank statement/ mobile bill of all directors
- Address proof for the company registered office (Rent agreement, Possession letter etc.)
- Electricity Bill of the office building
- Trademark Registration Certificate (if any)
- Obtain DSC
DSCs are the digital signatures which is separate for all the directors and the members. These are required for signing the incorporation documents as all the documents are required to be signed digitally.
- Name Filing
Form Spice-Part A is the new form introduced, which is required to be filled instead of Form RUN. Spice-Part A is a form which is used for the approval of the name.
- Drafting of Memorandum of Association
MOA defines the Constitution of the Company through the clauses namely - Name clause, Object clause, Registered Office clause, Liability clause, Capital clause.
- Drafting of Articles of Association
AOA defines the rules and regulation for operations of the company
- INC 12 -
This is the application for the license which is approved by the Central Government. This submitted in SPICE form along with – MOA, AOA, INC 14 (draft memorandum and articles of association have been drawn up in conformity with the provisions of section 8 and rules), INC 15 (Declaration by each of the persons making the application), An estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure.
- Filing SPICE-Part B
In form Spice-Part B disclosure of the Directors and the Shareholders details along with details like Registered Office, objects of the Company is filled.
- AGILE-Pro Filing
this is used for the application of GST, ESIC as well as EPF along with company registration. Declaration in SPICE-9. Since these are not required in Section 8 Company, this form can be attached as blank.
- Filing SPICE-Part B
In this forms the directors and shareholders provides a declaration of record of conviction
- Issuance of Incorporation Certificate
Incorporation Certificate is issued by the authorities, after documents scrutiny. Aloin with COI, INC12 (license), PAN and TAN are also issued
Relaxation in compliance norms
- Company Secretaries (CS) not mandatory
- No minimum share capital required
- Shorter notice period for AGMs
- Unless required it’s not mandatory to record minutes of meetings
- Only two directors can register the company
- No meetings required for decisions
NGOs registered which are registered as a Section 8 are ideal for performing the social activities without any hindrance from anyone. One can register their NGOs as Section 8 and can enjoy the benefits of raising funds and limited liability. It is governed by MCA under Company Act, 2013. The procedure of registration is really easy and the registration can be done within 7-10 days. As the filing requires expertise to draft the documents, you can contact Corpseed for the same.