Overview section 8 company registration

A section 8 company registered under the company’s act, 2013 is a non-profit organization (NPO) to promote art, science, literature, sports, social welfare, or knowledge sharing for a purpose or charity. The profits or income generated from there cannot be distributed as dividends to its shareholders and has to be used for promoting charitable purposes only.

These companies are limited companies that are established under the company’s act. The government grants them a license under section 8 company’s act. The registration procedure for section 8 company is similar to that of a private limited company. The only difference is these companies cannot add limited or Pvt limited in its name. Taxpotter provides expert help throughout the process for section 8 company registration.

Section 8 companies or non-profit organizations (NPO) are similar to trusts or society. But the difference is trusts or societies are registered under state regulations and a non-government organization (NGO) is governed by the central government and can work across the country.

Eligibility to register a section 8 company

An individual or group of individuals are eligible to register a section 8 company if they hold the below-mentioned intentions or objectives

  • When the company intends to work to promote art, culture, literature, science, research, religion, or alike other objectives.
  • The company must invest all the income and profits for promotion of such objects only
  • The company musty prohibit any payment of dividends to its members

Other conditions to be fulfilled for registering a section 8 company are:

  • Must be registered under company’s act 2013
  • Minimum 2 shareholders or directors are required
  • At least 1 director must be a resident of India
  • Important documents like memorandum of association (MoA), article of association (AoA), and financial statements
  • The company should conduct at least one board meeting within six calendar months.
  • All the properties of the company are under the name of the company. These can be sold as per the rules mentioned under the company’s act i.e prior consent from the board of directors by passing a resolution
  • The property and funds of the company, upon its dissolution must be transferred to other section 8 companies having similar objectives.
  • The company must ensure annual compliance by filing its annual returns with the registrar of the company (ROC).

Benefits of section 8 company

1. No minimum capital requirement

There is no need for minimum paid-up capital. That means a company can be formed without any share capital and required funds can be brought from donations or subscriptions.

2. Tax benefits

There are various exemptions and compensations provided to the company as well as to the donors.

3. Zero stamp duty

No stamp duty is applicable on the incorporation of section 8 company. As the company is exempted from payment of stamp duty for registration.

4. Separate legal identity

The company has a separate legal identity and a different personality from its members. The company also has perpetual succession.

5. Credibility

Section 8 companies are more credible compared to other forms of charitable trusts or organizations. They are governed by the central government and are required to file annual audits mandatorily.

6. Exemption to donors

Those donating to the NGOs are eligible to claim tax exemption under sections 12A and 80G of the income tax act.

Documents required for section 8 company registration

  • Pan card of members and directors
  • Id proof (voter ID, Aadhar card, driving license) of all members and directors
  • Bank statement
  • Passport-sized photograph of all directors and shareholders
  • Utility bills (electricity or telephone bills) of the registered office
  • Rental agreement and NOC from the owner, in case the registered place is rented
  • Digital signature certificate (DSC)
  • Digital identification number of all directors
  • Memorandum of association and article of association

Procedure for Section 8 company registration

For registering a section 8 company in Indian following steps are to be followed

Step 1 – Apply for DSC and DIN

The first step is to apply for a Digital signature certificate (DSC) and Digital identification number (DIN for all the directors.

The DSC is an electronic document used to authenticate all the documents online and DIN is a unique identification number for the directors. Both of these are mandatory before applying for company registration

Step 2 – Apply for name availability

The next is to apply for name approval by filing a reserve unique name (RUN) form, initially you will be allowed to propose for a maximum of 2 names only.

Section 8 companies should contain words like foundation, society, association, club, council, or chamber of commerce in their name.

Step 3 – File the MoA and AoA

After getting the name approval from ROC, The applicant must draft the MOA and AOA. Both these forms are necessary to register for the company.

The memorandum of association describes the approval of the company and articles of association have the rules and regulations of the company.

Step 4 – Apply for a company registration license

This is the most crucial step. Apply the INC-12 form for the section 8 company registration license with the regional director (RD). The RD will review the objectives, plans and issue licenses for company registration.

Step 5 - File the SPICe+ form

After getting a license, file the SPICe+ form with the registrar of the company (ROC) along with the required documents.

Once all clarifications have been given to the ROC, then he will issue a certificate along with a unique company identification number.

Step 6 – Apply for PAN, TAN, and bank account

After getting the incorporation certificate from the ROC you must apply for PAN, TAN, and a bank account.

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