Section 8 Company2023-08-21T10:37:13+05:30

Section 8 Company Registration

Section 8 Company is a company form of an organization that is registered under the Companies Act 2013 for charitable or non-profit purposes such as promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other objects.

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    What is Section 8 Company?

    Section 8 Company is a company that is primarily registered for charitable or non-profit purposes. There are various options available for registering a Non-profit organization and Section 8 Company is one of them. Moreover, Section 8 Company, being a corporate form of organization is one of the most popular types of a charitable/non-profit institution.

    It is generally formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other object. Also, the profits earned by Section 8 company shall be only used for the promotion of its charitable objects and it cannot be distributed to its members or shareholders.

    Section 8 company can be formed as a Private Limited Company or Public Limited Company without any minimum paid-up capital. The Company can be incorporated without using the word “Limited” or “Private Limited” in the name, as the case may be. Further, Section 8 Company can be incorporated with a minimum of 2 members/shareholders. It also gets various tax and compliance exemptions.

    Section 8 company, once registered can operate all over the country and is mostly preferred by government and businesses for providing grants and subsidies, due to its stringent compliance and transparency.

    Features of Section 8 Company Registration Online

    • Promotion of charitable objects

    Section 8 companies are registered only for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other object. Therefore, their primary purpose is to carry on charitable and social welfare activities.

    • Name of Section 8 Company

    The name of the Section 8 company shall have suffixes such as Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral trust, etc. It is not allowed to have suffix as “Private Limited Company” or “Limited Company”

    • License by Central Government

    Section 8 Companies are issued a separate license by the central government to carry on the business of promotion of religious or charitable objects all over the country. This is in addition to the certificate of incorporation which is issued to all the registered companies. A copy of the license provides the detailed terms and conditions of such a license.

    • Application of Profits

    Section 8 Company has to apply its income, surplus, profits, or any other income in the promotion of religious, charitable, or any other welfare activities. Therefore, the owners or members are not allowed to withdraw their profits as dividends, bonuses, or any other manner.

    Benefits of Section 8 Company Registration

    • Separate legal entity and limited liability

      Section 8 company is incorporated under the Companies Act having its own identity distinct from its members. It is an artificial person who can buy property, can sue or be sued, and enjoys perpetual succession. Further, the liability of members of a Section 8 Company is limited to the shares held by them. It means that if a company faces loss under any circumstances, then its shareholders are not liable to sell their personal assets for repayment of debts.

    • No minimum capital required

      After the Companies Amendment Act 2017, the minimum requirement of capital lakh for a private limited company and a public limited company was abolished. So now a section 8 company can be formed even with zero capital.

    • Higher credibility

      Section 8 Company is known as a modern form of charitable organization. It has more credibility and is preferred by the government and businesses in granting subsidies or giving donations due to high transparency and stringent compliance.

    • Various Tax Exemptions

      A Charitable Section 8 Company is eligible for registration under Section 12A/12AA and Section 80G of the Income Tax Act 1961. Under this section, donors get a deduction for the donation made by them under Section 80G, and the company also gets tax exemption on their surplus income/profits. Further, stamp duty for registration of Section 8 Company is either exempted or very minimal.

    • Less Compliance Burden

      Considering the charitable object of Section 8 company, the Ministry of Corporate Affairs (MCA) has given a number of relaxations including no requirement of appointing a company secretary, a shorter notice period for AGM, only 2 directors are sufficient in the board (In case of Public Company), relaxations in board meetings, etc

    Minimum requirements for Formation of Section 8 Company

    • Charitable Objects

    • Minimum 2 Shareholders

    • Minimum 2 Directors

    • At least 1 Director shall be a permanent resident of India

    • Minimum capital of Rs. 2

    • Documents as prescribed

    • DIN & DSC’s for all Directors/Shareholders

    What does our  Section 8 Company Registration package include?

    • Company name search and approval

    • Digital Signature Certificate (DSC) for 2 Director/Shareholder

    • Director Identification Number (DIN) for 2 Directors

    • Certificate of Incorporation/Registration

    • Company PAN and TAN

    • Memorandum of Association (MOA) and Articles of Association (AOA)

    • Section 8 License copy by Central Government

    • Supporting Document for opening Bank Account

    • Employees State Insurance Corporation Registration (ESIC) and Employees Provident Fund Registration (EPFO)

    • Professional Tax Registration (For Companies registered in the state of Maharashtra and Karnataka only)

    • Company Master File Kit

    Procedure for Section 8 Company Registration

    • Application for Name Approval

      An applicant has to provide 2 different names and main objectives for the proposed company. These names are then submitted to MCA, and MCA will approve one out of the two names. In addition, names provided should ideally be unique and suggestive of company business.

    • Application for Digital Signature Certificate (DSC)

      The next step is to apply for obtaining a Digital Signature Certificate (DSC) of directors and shareholders for the digital signing of forms. However, if the directors/shareholders already have DSC, then this step can be skipped.

    • Final Submission of SPICE+ forms along with MOA and AOA

      Once the name is approved and the Digital Signature Certificate (DSC) is generated, we must create and submit an incorporation application in SPICE+ form. This submission should include the Memorandum of Association (MOA), Articles of Association (AOA), 3 years estimated income and expenditure, a declaration by directors and professionals, etc. for obtaining final approval.

    • Get Incorporation Certificate, PAN, TAN, License Copy, etc.

      It typically takes 5-10 days to get the incorporation certificate. Incorporation certification is the proof of registration of a company. License copy, PAN, TAN, ESIC, EPFO, and Professional Tax registration will also be received simultaneously.

    • Opening of Bank Account

      You can submit the Incorporation certificate, MOA, AOA, PAN, TAN, License copy and other required documents to the bank to open your current account and start the company operations.

    Documents Required for Section 8 Company Registration

    • List of documents of Director and Shareholders –

      All the proposed directors and shareholders of the company should submit the following documents. All documents submitted should be valid and readable.

      Scanned Copy of–

      • PAN Card or Passport (Foreign Nationals & NRIs
      • Aadhaar Card/Voters ID/Passport/Driving License
      • Latest Bank Statement/Telephone Bill/Post-paid Mobile Bill/Electricity Bill (The address proof shall be recent and not older than 2 months)
      • Passport sized photograph

    • Registered Office Proof

      Section 8 Company should have a registered office place in India. The office address can be residential or commercial premises. The address proof shall be recent and not older than 2 months. The following documents are acceptable as proof of Registered Office Address:

      Scanned copy of-

      • Utility bills such as Electricity bill/Mobile Post-paid bill/Landline Post-paid bill/Gas bill/Water bill
      • No-objection Certificate from the property owner or whose name appears on such utility bill

    FAQ

    How much time is needed for setting up a Section 8 company in India?2021-12-07T23:26:09+05:30

    On average it takes 15-20 days for completion of registration, 2 approvals are required from governmental bodies. However, this is dependent on the workload of the Central Registration Centre (CRC), MCA.

    Do I need to be physically present during this process?2021-12-07T23:25:06+05:30

    No, company registration is a completely online process. All the required documents are filed electronically, so you would not need to be physically present at all. You would just need to send us scanned copies of all the required documents & forms.

    Who can be a member of a Section 8 Company?2021-12-07T23:24:30+05:30

    Any individual, organization, company, LLP, corporates, HUF, association of person, partnership firm, etc. can become the member/shareholder of the Section 8 Company. An individual person can also be a foreigner/NRI, but such person must be 18+ above in terms of age and should have a valid PAN card.

    Can a salaried person or a person in employment become director of a Section 8 Company?2021-12-07T23:19:29+05:30

    Yes, a salaried person or person in employment can become director of a Section 8 Company. One needs to check the employment agreement if that allows for such provisions. In a lot of cases, the employers are quite comfortable with the fact that their employee is a director in another company. However, if there’s a restriction in becoming a director of a company, one can hold shares in a company and become a shareholder alternatively.

    Is Section 8 Company required to have its books audited?2021-12-07T23:16:09+05:30

    Yes, just like any other company, Section 8 Company should also get its books audited and file the same with the Registrar of Companies (ROC) every year.

    Can Section 8 Companies receive contributions from overseas citizens or non-residents?2021-12-07T23:15:37+05:30

    Yes, Section 8 Companies can receive contributions or donations from non-residents, foreigners, overseas citizens. However, there are certain requirements to be complied with under the Foreign Contribution and Regulation Act, 2010 (FCRA) before receiving any such contributions or donations.

     

    Can I register Section 8 Company on my home or residential address?2021-12-07T23:15:03+05:30

    Yes, you can register Section 8 Company at their residential address. You need to submit the utility bill copy of your home address along with the No Objection Certificate from the owner of the premises.

    Can NRIs/Foreign Nationals become Director and Shareholder in a Section 8 Company in India?2021-12-07T22:51:22+05:30

    Yes, NRIs and Foreign National can become directors and shareholders in a Section 8 Company along with the required documents, also they can hold majority shares in the company. However, at least one Director on the Board of Directors should be a permanent resident of India.

    Can a Section 8 Company raise capital through foreign direct investment?2021-12-07T22:50:40+05:30

    Yes, a Section 8 Company can raise capital through FDI, subject to compliance with FEMA Regulations.

    Is GST mandatory for a Section 8 Company?2021-12-07T22:46:15+05:30

    GST registration is required for those businesses whose aggregate turnover crosses the prescribed limit or such business that does the inter-state supply of goods/services. So every company has to check whether it supplies goods to different states or qualifies for the prescribed turnover limit or any other conditions as specified under GST laws.

    Whether Section 8 Company can carry out microfinance activities?2021-10-16T19:52:56+05:30

    Yes, Section 8 Companies can carry out microfinance activities. The microfinance activities should be for the promotion of activities as stated in section 8(1)(a) of the Companies Act, 2013

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