Section 8 Company Registration
Section 8 Company is a company registered for charitable purposes. Section 8 Companies are similar to Trusts and Associations. Section 8 companies are registered as either a public or private limited company.
- Separate legal entity
- Charitable Objects
- Limited liability of members
- Restriction on payment of Dividend
- Needs to obtain License from Central Government
Overview of Section 8 Company Registration
Any person or an association of person can register a non-profit organization by forming a trust or society or a section 8 company. Any person or association of person can register a company under section 8 of the Companies Act, 2013 as a limited company by obtaining a license and adhering the following conditions:
- the objects of such company shall be promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;
- the profits or any other income earned by such companies shall be applied in promoting its objects
- prohibition on payment of dividend to its members
Though, Section 8 companies are registered as a public or private limited company, they have been exempted by the Central Government from use of the word “Limited” or “Private Limited” (as the case may be) in its name. The company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited companies.
Advantages of Section 8 Company Registration
Unique Name: The proposed name selected by you should be unique and should not resemble to the name of an existing company or Limited Liability Partnership.
Share Capital Share capital of a company is divided into four parts:
- Authorized Share Capital: It means such capital as is authorized by the Memorandum of a company to be the maximum amount of share capital that can be raised by a company.
- Issued Share Capital: It means such capital as the company issues from time to time for subscription
- Subscribed Share Capital: It means such part of the capital which is for the time being subscribed by the members of a company.
- Paid-up Share Capital: It means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid-up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called. There is no minimum paid-up share capital prescribed for a public/ private company. However, it is suggestible that the subscribers to the memorandum of association shall bring in some capital for carrying on the business operations of the company.
Directors: Director is a person appointed to the Board of a company. Board of Directors of a company are entitled to exercise all such powers and to do all such acts and things as the company is authorized to exercise and do except those which are specifically required to be exercised by a company in general meeting. Section 8 Company can be incorporated as Public/ Private Company and shall have such minimum number of Directors as applicable (two in case of private company and three in case of public company).
Subscriber: Subscriber means a person who has agreed to subscribe to the share capital of the company and on its registration, whose name is entered as a member in the Register of Members. Minimum seven subscribers are required to incorporate a public limited company and two subscribers are required to incorporate a private limited company. Subscribers of a company can be resident in or outside India. There is no restriction on a subscriber (being an individual) of a public limited company to be a director of the same company or vice versa. Section 8 Company can be incorporated as Public/ Private Company and shall have such minimum subscribers as applicable.
Registered Office: It is mandatory for every company to have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it. Registered office of the company must be situated in India.
Process
Note1: All Process take 10 – 14 days depends on working and availability of Proper documents and MCA Web site working
Document Required for Section 8 Company Registration
- From Directors
- From Company
- From Subscribers
Copy of PAN (in case of resident);
Copy of Passport (in case of non-resident);
Copy of proof of identity (Voters ID/ Passport/Driving License) ;
Copy of residential proof(Bank Statement/ Telephone Bill/ Mobile Bill/Gas Bill not older than two months);
Consent to act as directors*
Disclosure of interest in other entities*
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*
Copy of Sale deed/ Property Deed (in case of owned property) or Lease Deed (in case of rented premises)
Copy of latest Bank Statement/Telephone or Mobile/Electricity or Gas Bill of registered office (Any one, not older than 2 months)
No-objection Certificate from the owner from the owner of the premises for its use as registered office*
Memorandum of Association in Form INC 13 and Articles of Association*
Copy of PAN (in case of resident);
Copy of Passport (in case of non-resident);
Copy of proof of identity (Voters ID/Passport/ Driving License);
Copy of residential proof (Bank Statement/ Mobile Bill/Telephone Bill/ Gas Bill not older than two months);
Declaration in Form INC-15*
Note 1: In addition to the above documents, a declaration in Form INC 14 shall also be required
Note 2: Draft will be provided by our team*
Note 3: Following additional documents will be required in case the company to be incorporated is a subsidiary of another company: Copy of resolution passed by the Parent company for incorporation of subsidiary company; No-objection certificate from the parent company for using its name by the subsidiary company; Certificate of Incorporation of the Parent company.
Frequently Asked Questions
A Section 8 Company, as per the Companies Act, 2013, is a type of nonprofit organization formed for promoting charitable objectives such as education, art, science, sports, social welfare, religion, environment protection, or any other charitable purpose.
How is a Section 8 Company different from other types of companies?
Unlike other companies, Section 8 companies are formed primarily for charitable or not-for-profit purposes and are eligible for various tax benefits and exemptions under the Income Tax Act, 1961.
What are the key features of a Section 8 Company?
Key features include limited liability for members, exemption from the use of the term “Limited” or “Private Limited” in the company name, prohibition on the distribution of profits to members, and dissolution clauses specifying that assets will be transferred to another Section 8 company upon dissolution.
What are the eligibility criteria for forming a Section 8 Company?
To qualify for registration as a Section 8 Company, the proposed organization must intend to promote charitable objectives and apply its profits, if any, solely towards the promotion of those objectives.
What are the steps involved in registering a Section 8 Company?
Steps typically include obtaining Digital Signature Certificates (DSCs) for directors, obtaining Director Identification Numbers (DINs), choosing a unique company name, drafting the Memorandum of Association (MoA) and Articles of Association (AoA), and filing incorporation documents with the Registrar of Companies (RoC).
How is a Section 8 Company governed?
A Section 8 Company is governed by its board of directors, who are responsible for managing company affairs, ensuring compliance with legal and regulatory requirements, and fulfilling the organization’s charitable objectives.
What are the reporting and compliance requirements for Section 8 Companies?
Section 8 Companies must maintain accurate accounting records, prepare annual financial statements, file income tax returns, and comply with other regulatory obligations under the Companies Act, 2013, and other applicable laws.
Can a Section 8 Company generate profits or distribute dividends to its members?
No, Section 8 Companies are prohibited from distributing profits to their members or shareholders. Any surplus generated must be applied towards promoting the organization’s charitable objectives.
What are the tax benefits available to Section 8 Companies?
Section 8 Companies may be eligible for tax exemptions on their income and donations received under certain conditions as per the provisions of the Income Tax Act, 1961.
Can foreign nationals or entities form a Section 8 Company in India?
Yes, foreign nationals or entities can form a Section 8 Company in India subject to compliance with foreign exchange regulations, applicable laws, and obtaining necessary approvals from regulatory authorities.
Where can I find more information about forming and managing a Section 8 Company?
Additional information can be obtained from government websites, legal advisors, business support organizations, industry associations, and online resources dedicated to nonprofit organizations and charitable activities.