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Section 8 Company Registration

Overview:

Section 8 Company is named Section 8 of the Companies Act, 2013, which pertains to a established 'for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object', provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company or Section 25 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.

A Section 8 Company is similar to a Trust or Society; expect, a section 8 Company is registered under the Central Government's Ministry of Corporate Affairs. Trusts and Societies are registered under State Government regulations. A section 8 company has various advantages when compared to Trust or Society like improved recognition and better legal standing. Section 8 company also has higher credibility amongst donors, Government departments and other stakeholders.

A Company is a voluntary association of people, for doing some kind of business as distinct legal entity. The most common types of companies are - Private Limited Company, Public Limited Company, One Person Company and a Company licensed under Section 8 of the Companies Act, 2013. Registering a Company allows the business to acquire a firm position in the market.

What is Section 8 Companies

According to Section 8(1a, 1b, 1c) of the Companies Act, 2013, a Section 8 company can be established for “promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object”, provided it “intends to apply its profits, if any, or other income in promoting its objects” and “intends to prohibit the payment of any dividend to its members.” In India, a non-profit organisation can be registered as a company under Section 8 of the Companies Act, 2013 (erstwhile Section 25 of the Companies Act, 1956).

Legal Framework

In India, the Company registration is regulated by the Indian Companies Act, 2013 (and the amendments thereof) and rules and regulations made thereunder and is administered by the Ministry of Corporate Affairs, Government of India (MCA- www.mca.gov.in) through the Offices of Registrar of Companies ('RoC') in each state of India. The Company Incorporation rules, requirements, process, and procedures vary more or less depending particularly on the type of company to be incorporated.

Section 8 Company Registration India

Our government is under a lot of pressure to ameliorate the conditions within the national legislation. However, due to many factors, the central government cannot address each and every issue simultaneously and this creates a space for specific organizations which assist the government working for the well-being of society. Such organizations are known as non profit organizations or non- government organizations.

Widely known as Section-8 companies, these organizations are registered under the Section-8 of Companies Act 2013. These companies intend to promote art, commerce, sports, safety, science, research, healthcare, social welfare, religion, protection of the environment, etc. The main object of these companies ensure the promotion of above-mentioned fields, provided the profit is used for promoting only objects of the company (Sec 8(1)(b)). Sec 8 (1) (c) states the prohibition of payment of any dividend to its members. Ministry of Corporate Affairs (MCA), administers and maintains the rules and regulations through ROC in all of the states of India. The procedure for Section 8 Companys formation is as follows:

Digital Signature Certificate (DSC) and Director Identification Number (DIN): Digital Signature is a requisite when it comes to sign the documents while filing e-forms on MCA portal by the authorized person. It is also said that Digital Signature is the secure and authentic way of submission of a document electronically. It is obtained by making an application to certifying authority with a self-attested proof of address and identity.

DIN is obtained by filing an application in Form NO. DIR-3 on MCA portal, along with self-attested copy of PAN, Identity and Address proof, one recent passport sized color photograph of the Applicant. The approval and procession of DIN application is regulated through the office of Regional Director, MCA. The above mentioned required document must be attested by a practicing professional (Company Secretary, Cost, and Management Accountant, or Chartered Accountant).

Name Approval: This has to be obtained from ROC through an application submission in Form No.-INC 1. At most six names can be proposed in order of their preferences. Once approved by the authority, the name is valid for a span of sixty days. Usually, name approval takes 1-2 business days. The promoter or subscriber of the Memorandum of Articles and Association applies for the approval of name.

Memorandum of Association (MOA) and Articles of Association (AOA): Also known as Constitutional Documents of the proposed Company, they are filed as a draft with ROC with necessary documents in Form INC 12 which issues the company its license under Section-8. MOA and AOA of the company are drafted and filed with following necessary documents:

1. Subscription pages of MOA and AOA- Each subscriber to the memorandum signs the MOA and AOA by mentioning his name, address, description, and occupation, in the presence of a witness (if any). A foreign subscriber should have all of the required documents attested by the Consulate of Indian embassy in the respective country or foreign public notary. Other documents include Affidavits, Consent Letters, and Certificate of Compliance from a practicing professional in Form No. INC-8, etc.

A Section 8 company is an company which is registered as an non profit organisation. Non- profit organisation/company refers to a Company which has its object of the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment, intends to apply its profits, if any, or other income in promoting its objects.

A Non profit making company prohibits from paying any Dividend to its members.

A Section 8 company shall register itself under charitable objects, the Central Government shall issue a License in prescribed manner allow that person or association of person to register as Private Limited or Public Limited Company. Procedure for Section 8 Company Registration

As per the new Companies Act, 2013 a Section 8 company has to be registered as an normal Private Limited Company.

First the members of the company, which should be minimum two has to obtain DSC and then DIN which is mandatory.

Name approval comes next, which should not violate the Naming Guidelines of Ministry of Corporate Affairs.

The draft Constitutional Documents of proposed Company i.e. Memorandum of Association (MOA) and Articles of Association (AOA) is to be drafted and then filed with the RoC along with the forms.

The last page of the MOA and AOA must contain details of the subscribers to the Memorandum and Articles and the number of shares to be subscribed by each. This last page is required to be executed by subscribers.

In the case of foreign subscriber the above documents need to be consularised before the Indian Embassy in the respective Country. In case of wholly owned subsidiary, a copy of the Board resolution of Holding Company approving the investment in the proposed Indian Company and authorizing a person to sign the incorporation papers on behalf of the company, duly attested by the officer of the Indian Embassy in the foreign country where the registered office is situate is also required to be attached with the papers.

A form INC-12 has to be filed with the ROC for the application of license.
After receiving license approval from the Central Government, Form INC-7 and DIR-12 has to be filed in order to obtain Certificate of Incorporation.

01 APPLY FOR DSC AND DIN

The first step in registering your company is to apply for DSC (Digital Signature Certificate) Since all the forms are uploaded on-line any one of the Director should obtain DSC. Secondly, obtaining DIN for the Directors. It is a unique eight digit number, which is allotted to every Director and has lifetime validity.

02 NAME RESERVATION

After completing first step, next comes your company name. If the proposed company name is more than one, then we have to apply for Name reservation. Maximum we can apply with six names and in that any one name will be approved by the RoC.

03 APPLICATION FOR LICENCE

When the name is approved, as Section 8 company have to apply for license in order to carry out his charitable object. So, documents will be drafted from our end with guidance of expert team of Company Secretaries and after your confirmation and signature, necessary forms will be submitted. Granting of license is in the hands of RoC and it will take some time for approval.

04 CERTIFICATE OF INCORPORATION

While receiving the license copy from Roc, we have to again file necessary forms for obtaining Certificate of Incorporation. Certificate of incorporation will be released when the Forms are approved. Once the certificate gets released from the moment onwards your company is legally formed and you can start running your business. After the incorporation, we will apply for your Company PAN and TAN.

Minimum Requirements for Section-8 Company:

1. At least two shareholders
2. Minimum two directors
Shareholders and Directors could be same.
3. At least one Director should be Indian resident
4. There is no minimum capital required.
5. Income tax PAN (mandatory)
6. Identity Proof (Voter ID/ Aadhar Card, etc)
7. Passport (mandatory)
8. Proof of residence ( Electricity/ Telephone/ Mobile Bill or Bank Statement)
9. Registered Office Address Proof (Rent agreement if the premises is not owned by the company)
10. Documents claiming the ownership such as Sale Deed or House Tax receipt along with an NOC.

CONCERNS RELATED TO SECTION 8 COMPANY:

Profit or income of the Section 8 Company cannot be used for any object other than those mentioned in its MOA.
Distribution of profits or declaration of dividend to its members is prohibited.
No member can be appointed as an office of the company with any remuneration.
Its income is taxed at the same rates as other companies.
A Section 8 Company cannot alter the provisions of its MOA and AOA except with the previous approval of the Central Government.

ADVANTAGES OF SECTION 8 COMPANY REGISTRATION:

No Minimum Share Capital Requirement
Easy Transfer of Ownership
Tax Benefits
No need to use “Section 8” or “Limited” title
No Stamp Duty
Clear Objectives for easy donations and loans
Easy to Manage
Exemptions and Privileges under Companies Act, 2013
Relaxation in Compliances

FREQUENTLY ASKED QUESTIONS:

What is section 8 company?
A NGO or Non Profit Organisation is an entity that operates for promotion of art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.

In India, an NGO can be registered as any of the three structures being Company under Section 8 of the Companies Act, 2013(section 25, companies act 1956), Trust or Society.

Section 8 Company format of a NGO is most popular form of NGO in India. It is easy to register, run or manage a Section 8 Company in comparison of a Trust and a Society.

What are the features of a section 8 company?
Object: *It operates for common welfare of masses at large, for promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.

Profit Earning: *The objective is not to earn profit. If any profit is earned during course of its operation, the same is not to be shared among owners/members rather utilised for attaining the objects for which NGO was formed.

Utilisation of funds and earnings: *The profits, if any, or other income is used towards promoting of specific objects of NGO. Further there is restriction on declaration of profits as dividend to members.

What are the minimum requirement to start a section 8 company?
Minimum two shareholders;
Minimum two Directors (Directors and shareholders can be same person);
At least one Director shall be resident in India;
No Minimum capital required;
Income-tax PAN is a mandatory requirement in case of Indian nationals;
Any one of the Identity Proof (Voter ID/Aadhar Card/Driving License/Passport); Passport is mandatory requirement for proof of identity in case of foreign nationals;
Any one Proof of Residence (Electricity Bill/Telephone Bill/Mobile Bill/Bank Statement);
Registered Office address proof (rent agreement along with latest rent receipt and copy of latest utility bill in the name of landlord and a no objection certificate from the owner of the premises, in case the premises are rented);In case the premises are owned by a Director and Promoters, any documents establishing the ownership such as Sale Deed/House Tax receipt etc along with the no objection certificate.

what are the additional requirments for section 8 company?
Multiple forms need to be filed to apply for license. The most important form is eForm INC 12 (for issuance of license under section 8 of the Companies Act, 2013). This application shall be accompanied by:

Memorandum & Articles of Association of the proposed company;
A declaration confirming the application by a Company Secretary in Practice on the Non – Judicial stamp paper of prescribed value;
List of names, descriptions, addresses & occupation of the promoters as well as Board Members of the proposed company;
A statement showing details of assets and liabilities of the company as on date with the application;
An estimate of future annual income and expenditure of the proposed company, specifying the source of income and object of expenditure;
A statement giving brief description of work, if any, already done by the association;
A statement specifying briefly the grounds on which the application is made;
A declaration in prescribed form on non – judicial stamp paper by each person making an application;
A letter of authority;
Payment of prescribed fee Looks like too much effort? The whole process will be carried out online. You just need to upload the required documents on our encrypted Document vault and our experts will take care of all formalities for you.
Is digital signature mandatory for carrying out registration formalities?
Digital Signature is the only secure and authentic way that a document can be submitted electronically. All filings of e-forms on MCA Portal are required to be filed with the use of Digital Signatures by the person authorised to sign the documents.
Under the plan you can obtain 2 class II digital signatures along with E-token, having a validity of 2 years.
In case, you already have a DSC, our experts will offer you some concession accordingly on the above package

I wish to start my ngo the objective is to impart quality education and upliftment of unprivileged children should i form a trust, society or register as a section 8 company?

In India, NGOs can be registered as Section 8 Company, trust or society. While, Trusts and Societies are registered under State Government regulations, section 8 companies are registered under Ministry of Corporate Affairs.

Forming a section 8 company is prefered due to following reasons: Improved recognition Better legal standing. Higher credibility amongst donors, Government departments and other stakeholders. Relaxation from a number of companies act regulations

Is it necessary to have 2 directors for a section 8 company?
Yes, you need a minimum of two directors for a section 8 company registration.

for incorporation of section 8 company, do I have to be present in person?
The entire procedure is 100% online and you don’t have to be present at our office or any other office for incorporation. A scanned copy of documents has to uploaded on document vault and our experts will carry out all registration formalities for you.

How much time will the a section 8 company take?
The incorporation process gets completed on obtaining the license and issue of incorporation certificate under section 8 of Companies Act 2013, (earlier section 25 of Companies act 1956). The whole process of company incorporation can be closed less than 20 days. The time taken also depends on relevant documents provided by the applicant and speed of approvals from government. To ensure speedy registration, please pick a unique name for the proposed Company and make sure you have all the required documents prior to starting the registration process.

Will there be a need for any other special registration required?In addition to registration, a non-profit engaged in certain activities might also require special license/permission. Some of these include (but are not limited to):
A place of work in a restricted area (like a tribal area or a border area requires a special permit – the Inner Line Permit – usually issues either by the Ministry of Home Affairs or by the relevant local authority (i.e., district magistrate).
To open an office and employ people, the NGO should be registered under the Shop and Establishment Act.
To employ foreign staff, an Indian non-profit needs to be registered as a trust/society/company, have FCRA registration and also obtain a No Objection Certificate. The intended employee also needs a work visa.
A foreign non-profit setting up an office in India and wanting staff from abroad needs to be registered as a trust/society/company, needs permission from the Reserve Bank of India and also a No Objection Certificate from the Ministry of External Affairs.
Under this plan ClearTax will help you register your NGO as a section 8 company. Our customer support will help you connect with an expert who shall advise you on applicability of other registration required. The additional registrations services(such as shop & establishment act registration etc) shall not form part of the plan and will be charged separately.

Is it necessary to have 2 directors for Section 8 Company Registration?
Yes, you need a minimum of two directors for a section 8 company registration.

Who can become a member in Section 8 Company?
Any individual/organization can become the member of Section 8 Company including foreigners/NRI’s.

For incorporation of Section 8 Company, do I have to be present in person?
The entire procedure is 100% online and you don’t have to be present at our office or any other office for incorporation. A scanned copy of documents has to be sent via mail..

Are there any other payments to be made for incorporation certificate in addition to fee paid at the time of registration?
There is absolutely no other payment. We will send you an invoice that is all-inclusive, with no hidden charges.

Time taken by Ashoka Consultany in forming a Section 8 Company?
Ashoka Consultany can incorporate a section 8 Company in less than 30 days. The time taken also depends on relevant documents provided by the applicant and speed of approvals from government. To ensure speedy registration, please pick a unique name for the proposed Company and make sure you have all the required documents prior to starting the registration process.

Is it necessary to have a charitable object to register a Section 8 company?
Yes, it is necessary to have a non-profit motive to incorporate a Section 8 company.

What is the life span of the Section 8 company?
The life span of the company is not dependent on or related to the life of any particular person(s) or individual(s). It could go on indefinitely until it accomplishes its objective, merges with another such company, or goes bankrupt.

In which cities does Ashoka consultany incorporate Section 8 Company?
Ashoka consultany provides Section 8 Company incorporation services across India in all cities. We have done Section 8 company registration in Mumbai, Delhi, Gurgaon, Noida, Bangalore, Chennai, Hyderabad, Ahmedabad, Kolkata, Surat, Pune, Jaipur, Lucknow, Kanpur, Nagpur and other Indian cities

Why should I choose Ashoka consultany for Section 8 Company registration?
Ashoka consultany is one of the best online service portals to help register Section 8 Companies in India. We have 10 years of experience in application of Section 8 Company registration. Ashoka consultany has 20+ regional offices in India and expand its network in India with 1500+ customers for Section 8 Company.

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