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Section 8 Company Registration in India

Want to register your company in India as a Non-Profit Organisation? Choose Section 8 of Companies Act, 2013 and register your company with Startup Movers hassle free.

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What is a Section 8 Company Meaning?

Section 8 Companies are the NGOs registered under Companies Act, 2013 to promote arts, commerce, science, research, education, sports, charity, etc. The Section 8 Companies are more credible and trustworthy among stakeholders, Government, etc. Also, Section 8 Companies get more benefits as compared with Trust & Society. Let’s discuss these benefits in detail: Section 8 Companies are the NGOs registered under Companies Act, 2013 to promote arts, commerce, science, research, education, sports, charity, etc. The Section 8 Companies are more credible and trustworthy among stakeholders, Government, etc. Also, Section 8 Companies get more benefits as compared with Trust & Society. Let’s discuss these benefits in detail:

Benefits of a Section 8 Company

No minimum Capital

Section 8 Company does not require a prescribed minimum paid-up share capital.

Limited Liability

Liabilities of the members of Section 8 Company are limited to their capital contributions.

Credibility

Section 8 Companies enjoy more credibility as compared to NGOs, societies and trusts because they are recognized by Central Government’s licence.

Stamp Duty

Section 8 Company is exempted for the payment of stamp duty applicable for registration as applicable in case of other structures such as private limited or a public limited company.

Tax Exemption

Section 8 company can apply for exemption u/s 12AA of the Income Tax Act. It is also eligible for registration u/s 80G of the Income Tax Act.

Foreign Donations

Section 8 company can receive the foreign contributions after getting itself registered under Foreign Contribution (Regulation) Act, (FCRA), 2010.

Documents Required for Section 8 Company Registration

To register your Section 8 Company in India, certain mandatory documents must be there and they are as follows:

Who and Why
  • ID Proof: Identity Proof such as PAN Card, Aadhaar Card or Passport of all Directors & Shareholders.
  • Address Proof: Recent bank statement/utility bill in the name of the director (not older than two months).
  • Passport-size Photograph: Passport-size photograph of all the directors within the organization is needed.
  • Registered Office Address Proof: Latest utility bill within 2 months along with NOC from the owner and rent agreement (if rented) or Ownership Proof (if owned).

Final Deliverables You Get

Here is the list of what you will get from Startup Movers:

  • Name Approval Letter
  • License
  • Drafting of MOA/AOA
  • Procuring DSC
  • Filing of INC 20A for Commencement of Business
  • DIN Approval Letter
  • PAN Card of the Company
  • TAN No of the Company
  • Incorporation kit to help you open a bank account

Section 8 Company Registration Process

Follow these steps to register your Section 8 Company in India:

To register your Section 8 Company, the first step is to apply to the DSC of all the directors to sign the eForms digitally.

Once the DSC of all Directors obtained, the next step is to reserve the Company's name. This name is reserved under the RUN (Reserve Unique Name) Form and it must include words such as Foundation, Federation, Association, Forum, Chambers, Confederation, Council, Electoral Trust etc.

Next file Form INC-12 to obtain the Section 8 License. On the approval of the application a 6-digit number will be issued for your Company.

Draft MoA & AoA of the Company outlining Company’s objective while AoA defines the Rules & Regulations on which company’s management lays down.

Next you need to submit SPICe+ Incorporation form to the ROC. On the final approval, ROC will issue COI (Certificate of Incorporation) along with a Unique CIN (Company’s Identification Number).

Things to Consider while Registering Section 8 Company

There are certain points that should be kept in mind before registering a Section 8 Company in India. Section 8 Company is restricted to certain things and they are as follow:

Number of Directors

Section 8 Company requires a minimum 2 directors for Private Limited Company and they must hold Director Identification Number.

Organisation Objective

Section 8 Company’s Object must be charitable, choosing any other objective for section 8 company is prohibited.

Individual/HUFs

An Individual or HUF are eligible to start their Section 8 Company all alone.

Management

Unlike a Trust, Section 8 Company is not managed by any specific Trustees but handled by the Board of Directors as per company’s MoA & AoA.

No Remuneration

Any Member, Director or Founder is not allowed to draw remuneration in any kind of Cash or anything.

No Profit

Section 8 Company is made for charity purpose, thus distribution of profit among its members or directors is restricted

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Frequently asked questions

Everything you need to know about the product and billing.

There is no restriction in the provisions of the Companies Act, 2013 for a registered Trust to become a member of Section 8 Company. In case of unregistered trusts, provisions of section 89 would be applicable.

Section 8 Company, if covered under limits as prescribed under Rule 3 of Companies (Appointment of Directors) Rules, 2014 is required to appoint women director under second proviso to Section 149(1). Also, every existing section 8 company falling under the prescribed criteria should have complied with this provision within one year from the commencement of this provision i.e. by March 31, 2015.
Also, if section 8 company is incorporated under Companies Act, 2013 and falls under second proviso to Section 149(1), then, it should comply with the requirement of appointing women director within six months of the incorporation of the company.

Clause 5(ii) of the Form INC 13 provided under rule 19(2) of the Companies (Incorporation) Rules, 2014 provides that – “No portion of the profits, other income or property aforesaid shall be paid or transferred, directly or indirectly, by way of dividend, bonus or otherwise by way of profit, to persons who, at any time are, or have been, members of the company or to any one or more of them or to any persons claiming through any one or more of them.” In view of the above there is no restriction in payment of bonus to employees, however bonus cannot be paid to a member, even in his capacity as an employee.

A section 8 company can take loan from its members and pay interest thereupon, subject to the provisions of Chapter V of the Act read with rules made thereunder.

The activities which may be passed by the Board of section 8 companies through circulation instead of at a meeting, as given under section 179(3) are:
  • To borrow monies
  • To invest the funds of the company
  • To grant loans or give guarantee or provide security in respect of loans.

There are special requirements to be complied with under the Foreign Contribution and Regulation Act, 2010 before a Section 8 Company can receive any contributions or donations from overseas/outside India from non-residents. The provisions of this act are in addition to the provisions under the Companies Act.

A Section 8 Company is prohibited from issue of bonus shares because:
  • As per section 8(1)(b) of the Act, Section 8 Company shall intend to apply its profits, if any, or other income in promoting its objects;
  • As per section 8(1)(c) of the Act, Section 8 Company should intend to prohibit the payment of any dividend to its members; and

There is no restriction in payment of remuneration to an employee/director. In case the employee is also a member, no remuneration or other benefit in money or money’s worth can be given to him except payment of out of pocket expenses, reasonable and proper interest on money lent, or reasonable and proper rent on premises let to the company.

As per exemption notification dated 05th June, 2015, the definition of Company Secretary in section 2(24) of the Companies Act, 2013 is not applicable on Section 8 Companies.
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