Step for Section 8 Company
Step for Section 8 Company
Section 8 Company ~ Trust ~ Society
In India, there are mainly the three types of non-profit organizations i.e. Section 8 Companies (earlier Section 25): Societies registered under section 20 of the Societies Registration Act 1860. Trusts formed under Indian Trusts Act 1882. The following are the main differences between Section-8 Company, Trust and Society.
| Particulars | Section-8 Company | Trust | Society |
|---|
| Governing Law | Companies Act, 2013 | Indian Trusts Act, 1982 | Societies Registration Act, 1860 |
|---|
| Rigistering Authority | MCA | Sub-Registrar | Society Registrar |
|---|
| Minimum Members | Two | Tow members | 7 Members |
|---|
| Cost of Formation | High | Medium | Low |
|---|
| Compliance | High | Low | Medium |
|---|
| Grants and Subsidies | High | Medium | Medium |
|---|
| FCRA Preference | High | Low | Low |
|---|
| Section 80G & 12 A | Allowed | Allowed | Allowed |
|---|
| Stamp Duty | To be paid | To be paid | Not required |
|---|
| Transperency | High | Less | Less |
|---|
Minimum Requirements for Section-8 Company Registration
| Directors | Min of 2 | Max of 15 |
| Shareholders | Min of 2 | Max of Unlimited |
| Authorised Share Capital | Min of Rs.2 | Max unlimited |
| Paidup Share Capital | Min of Rs.2 | Max unlimited |
- Two directors and two shareholders are rquired. The directors and shareholders may be the same persons. They should be majors. The director must be an Individual whereas the shareholder may be the body corporate. One of the directors must be resident Indian.
- Authorised Share Capital is the amount up to which, you can invest in the company as share capital.
- Paidup Share Capital is the amount up to which, you can deposit in the Company's Bank Account towards Share Capital.
Documents Required for Section-8 Company Registration
A
Directors Documents
- Directors PAN
- Directors ID Proofs
Aadhaar Card or Voter ID or Passport or Driver's License - Directors Address Proofs:
Latest one month Savings Bank statement or
Latest Telephone Bill on his own name or
Latest Moblie Bill on his name or
Latest Power Bill on his own name. - Directors latest passport size photograph
- Directors Email ids
- Directors Mobile Numbers linked with their Aadhar
- Incase of Foreign direcrtors, International Passport is mandatory
B
Company Documents
- Registered Office Address Proof: Latest Power Bill
- No-objection letter from the Landlord.
- Rental Agreement from the landlord if the premises are rented.
- Company email id.
DOCUMENTS AND DETAILS REQUIRED
DOCUMENTS AND DETAILS REQUIRED
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The following documents are required to complete the
incorporation process for a Section 8 company in India:
· Articles
of Association (AOA) and Memorandum of Association (MOA)
· Declaration
by the first director(s) and subscriber(s) (an affidavit is not required)
· Proof
of office address, such as a copy of utility bills like electricity, water, or
gas bill
· Copy
of the certificate of incorporation (COI) of an overseas corporate body (if
any)
· A
resolution passed by the promoter company
· Consent
of Nominee (INC-3)
· Residential
and identity proof of nominees and subscribers
· Applicant's
identity and residential proof
· Digital
Signature Certificate (DSC)
· Declaration
of unregistered companies.
By providing these documents, you can ensure
smooth and efficient Section 8 company incorporation processes.
PROFESSIONAL FEE FOR INCORPORATION
PROFESSIONAL FEE FOR INCORPORATION
PROFESSIONAL FEE FOR INCORPORATION
Section 8 Company Overview
Section 8 Company Overview
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.
At Golegal Filing/ JKITR, we provide
end-to-end services for registering Section 8 companies in India. Our team of
experts offers hassle-free and professional services to help you establish a
Section 8 company quickly and efficiently. Contact us today to avail of our
professional services for registering your Section 8 Company in India.
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.
Overview of Section 8 Company Registration
A Section 8 Company is a type of corporation established to
promote non-profit activities, such as education, social welfare, environment
preservation, arts, sports, charity, and more. This follows the provisions of
the Companies Act 2013.
The essential purpose of registering
a Section 8 Company is to encourage non-profitable goals, including but not
limited to trade, arts, commerce, education, charity, environmental protection,
sports research, and social welfare. To register a Section 8 Company, a minimum
of two directors are required, and there is no requirement for a minimum
paid-up capital to set up such a company.
Key Points about Section 8 Company
Key Points about Section 8 Company
·
In India, Non-Governmental
Organizations (NGOs) can be registered under the Registrar of Societies or as a
non-profit entity under Section 8 Company of the Companies Act, 2013.
·
Profit generated by Section 8
Companies cannot be used for purposes other than charitable objectives and
cannot be distributed among shareholders.
·
Section 8 Companies are similar to
the erstwhile Section 25 Company under the Company Act 1956. As per the
prevailing Company Act, these are now recognized as Section 8 Companies.
·
Section 8 Companies are required to
comply with the provisions of the Companies Act 2013. They are mandated to
maintain books of accounts, file returns with the Registrar of Companies
(ROCs), and comply with GST and IT Act.
·
Any changes to the charter documents
like the Articles of Association (AoA) and Memorandum of Association (MoA)
require the government's consent.
Benefits of Opening a Section 8 Company in India
Benefits of Opening a Section 8 Company in India
Incorporating a Section 8 company in India
offers numerous advantages, some highlighted below.
Tax Exemption
Section 8 companies
registered under section 12AA of the Income Tax Act are eligible for a 100% tax
exemption, as they utilize their profits for charitable purposes. This is a
significant benefit as the profits generated by such entities are non-taxable.
No Minimum Capital Requirement
Unlike public limited
companies, Section 8 entities do not have a minimum capital requirement. They
can adjust their capital structure according to their growth, giving them more
flexibility.
Separate Legal Entity
Section 8 companies have a
separate legal identity and perpetual existence, just like other registered
companies. This increases their credibility and provides them with more
autonomy and legal standing.
Increased Credibility
Section 8 companies are
subject to strict legal compliance frameworks, enhancing their credibility
regarding legal standing. Unlike NGOs and trusts, Section 8 entities follow
stringent compliances post-registration, making them more trustworthy.
No Title Required
Section 8 companies are free to choose a name that suits
their liking during the registration process. Unlike other registered
structures, they are not required to affix the term "Section 8" after
their name.
A Section 8 company in India
offers numerous benefits, including tax exemption, no minimum capital
requirement, no need to pay stamp duty, separate legal identity, increased
credibility, and no title required. These advantages make Section 8 companies
attractive for entrepreneurs looking to start a business with a charitable or
social cause.
Eligibility Criteria for Incorporation of the Section 8 Company
Eligibility Criteria for Incorporation of the Section 8 Company
Specific eligibility criteria must be met to establish a
Section 8 company in India.
· An
Indian national or Hindu Undivided Family (HUF) can incorporate a Section 8
Company.
· The
entity must have at least one director.
· The
primary object of the Section 8 Company should be related to promoting art and
science, sports, charitable activities, education, or providing financial
assistance to individuals from lower-income groups.
These eligibility criteria ensure
that the Section 8 Company operates to promote social welfare and contribute to
the greater good of society.
Mandatory legal requirements for Section 8 Company
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:
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.
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.
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.
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.
Section 8 Company Incorporation Process
Section 8 Company Incorporation Process
The process of incorporating Section 8
companies in India involves the following steps:
Step 1: Obtain Digital Signature Certificate (DSC)
The first step is to obtain a Digital Signature
Certificate (DSC) for the proposed directors of the Section 8 Company. This
certificate is required for the online filing of documents with the Ministry of
Corporate Affairs (MCA). Form DIR-3 is used for obtaining the DIN and should be
filed along with the DSC of the proposed directors.
Forms to be used: DIR-3, DSC
Step 2: Obtain Director Identification Number (DIN)
After obtaining the DSC, the next step is to apply for a
Director Identification Number (DIN) for the proposed directors. The DIN number
is a unique identification number issued by the MCA to individuals who wish to
be directors of a company in India.
Forms to be used: DIR-3
Step 3: Reserve the Company Name
The next step is to reserve the name of the proposed
Company with the MCA. The Section 8 company name should be unique and not be
similar to any existing company name. Form INC-1 is used for reserving the
company name.
Forms to be used: INC-1
Step 4: File the Application for Incorporation
After the company name is approved, the next step is to
apply for Section 8 Company incorporation. The application for incorporation is
filed in Form INC-32 along with the Company's Memorandum of Association (MOA)
and Articles of Association (AOA).
Forms to be used: INC-32,
MOA, and AOA
Step 5: Obtain a License for Section 8 Company
Once the application for incorporation is approved, the
next step is to obtain a license for the Section 8 Company. Form INC-12 is used
for obtaining the license. It should be filed along with the necessary
documents.
Forms to be used: INC-12
Step 6: Obtain a Certificate of Incorporation
After obtaining the license, the MCA issues a Certificate
of Incorporation in Form INC-16. This certificate confirms the incorporation of
the Section 8 Company.
Forms to be used: INC-16
In summary, the forms used
for Section 8 Company registration are DIR-3, DSC, INC-1, INC-32, MOA, AOA,
INC-12, and INC-16.
Donations/Funding of Section 8 Company
A Section 8 Company cannot collect capital through deposits
but can accept donations from the public. Several methods are available to
raise funds, such as foreign donations, equity funding, and domestic donations.
· Foreign contributions are permissible
only if FCRA registration is obtained, which can be applied for three years
after registration.
· If immediate foreign contributions are
required, prior permission from the commissioner can be requested.
· Equity funding can be achieved by
releasing new equity shares at a premium price. Domestic subsidies have no restrictions,
but it is vital to establish a comprehensive system to prevent money
laundering.
Frequently asked Questions Section 8 Company
Frequently asked Questions Section 8 Company
What is a Section 8
company?
It is a type of
not-for-profit company set up for the promotion of art, science, commerce,
charity, sports, education, research, or any other useful activity. These
companies are typically formed to benefit a specific community or purpose and
are excluded from the provisions of the Companies Act, 2013 that generally
apply to other companies.
Can Section 8 company make profit?
Yes, Section 8 companies
can make a profit. Section 8 companies are businesses that receive subsidies
from the government to provide services to low-income people. They can also use
different ways to gain incomes such as - Investment, Donations, Funding, etc.
What is difference between NGO and Section 8 company?
A Non-Governmental
Organization (NGO) is an organization that is independently established and
operated, usually with a charitable, educational, religious, or social purpose.
NGOs are usually non-profit and do not have a profit motive.
A Section 8 Company is a non-profit organization formed to promote commerce,
art, science, sports, education, research, social welfare, religion, charity,
protection of environment or any other such object. Section 8 companies are
allowed to generate profit but they must use their profits for the purpose of
achieving their goals and not for the benefit of its members.
Do I have to be present in-person to incorporate a Section
8 Company?
No, you will not have to
be present at our office or appear at any office for the registration of a
Section 8 Company. All the documents can be scanned and sent through email to
our office. Some documents will also have to be couriered to our office.
What are the documents required for registration?
Identity proof and
address proof are mandatory for all the proposed Directors of the Section 8
Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord
of the registered office premises must provide a No Objection Certificate for
having the registered office in his/her premises and must submit his/her
identity proof and address proof.
How long it will take to incorporate a Company?
Golegalfiling and JKITR
can incorporate a Section 8 Company for in 20-30 days. The time taken for
registration will depend on the submission of relevant documents by the client
and the speed of Government Approvals. To ensure speedy registration, please
choose a unique name for your Company and ensure you have all the required
documents prior to starting the registration process.
How long is the registration of the Company valid?
Once a Company is
incorporated, it will be active and in existence as long as the annual
compliances are met with regularly. In case, annual compliances are not
complied with, the Company will become a Dormant Company and may be struck off
from the register after a period of time. A struck-off Company can be revived
for a period of up to 20 years.
What is a Digital Signature Certificate?
A Digital Signature
establishes the identity of the sender or signee electronically while filing
documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates
that the Directors sign some of the application documents using their Digital
Signature. Hence, a Digital Signature is required for all Directors of a
proposed Section 8 Company.
What is the Director Identification Number?
Director Identification
Number is a unique identification number assigned to all existing and proposed
Directors of a Company. It is mandatory for all present or proposed Directors
to have a Director Identification Number. Director Identification Number never
expires and a person can have only one Director Identification Number.
Can NRIs /Foreign Nationals be a Director in a Section 8
Company?
Yes, a NRI or Foreign
National can be a Director in a Section 8 Company after obtaining Director
Identification Number. However, at least one Director on the Board of Directors
must be a Resident India.
SAMPLE OF LICENCE UNDER SECTION 8
LICENCE BY MCA UNDER SECTION 8
INC 9 SAMPLE AFFADAVIT
INC 9 SAMPLE AFFADAVIT
INC 14 COMPANY SECRETARY CERTIFICATE SAMPLE
SAMPLE INC 14 RS. 50.00 STAMP PAPER
SOURCE OF FUNDS CERTIFICATE SECTION 8
SAMPLE CERIFICATE BY PROMOTERS OF SECTION 8 COMPANY
SAMPLE INCOME EXPENDITURE STATEMENT
3 YEARS ESTIMATED INCOME EXPENDITURE
GROUNDS OF APPLICATION FOR SECTION 8
SAMPLE GROUDS OF APPLICATION FOR SECTION 8 COMPANY
ASSETS AND LIABILITIES STATEMENT
ASSETS AND LIABILITIES STATEMENT SECTION 8
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