Section 8 Company Registration

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SECTION 8 COMPANY REGISTRATION - An Overview

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According to the Ministry of Corporate Affairs, a Section 8 company is incorporated as a non-profit organization. The incorporation of a Section 8 company is done with the objective of promoting arts, commerce, education, charity, protection of the environment, sports, science, research, social welfare, religion and is intended to use its profits or other incomes for the promotion of these objectives.

In this article, we will learn what is Section 8 company, the procedure for incorporation of Section 8 company, Section 8 company registration online, etc.

What is Section 8 Company?

A Section 8 company registration online is done solely with the service motive, i.e., it does utilize its dividend for any other purpose apart from those in the benefit of the company and charitable purposes. A section 8 company is liable to adhere to the rules formulated by the Government. As per the rules, failure to comply with the regulations can lead to the winding up of the company on the orders of the government.

Please note that while the activities and compliances of a private limited company and a Section 8 company are alike, their names cannot be interchanged.

Who is eligible to do Section 8 Company Registration Online?

In order to do Section 8 Company registration online, one should comply with the objectives of the Central Government:

  1. The company shall intend to promote science, commerce, education, arts, sports, research, religion, protection of the environment or alike, and work in favour of the aforementioned objectives;
  2.  The company plans to invest all the profits of the firm or any other income generated after incorporation of the company in the promotion of only;
  3. The company does not hold a view of paying any dividend to its members.

Procedure for Incorporation of Section 8 Company

The procedure and requirements of a Section 8 Company registration online are the same as the ones laid down for a limited company. This includes all the rights and obligations that come with a limited company. The only aspect where a Section 8 company differs from a limited company is that the former cannot use the words “Section 8” or “Limited” in its name.

1. Application for name availability:

Application for name availability must be filed through the “RUN” form. The name of the Section 8 Company must include the following words- Foundation, Forum, Association, Confederation, Council, Electoral Trust, etc. One can propose a maximum of two names at a time and only up to one resubmission is allowed in the RUN facility. It is advisable to attach the object clause of your Section 8 company at the time of availing the RUN facility.

2. Obtaining DSCs of First Directors:

The next step is to obtain the Digital Signature Certificates of first subscribers and directors which are required for filing the form of incorporation of Section 8 company with the Registrar of Companies.

3. Preparation of Memorandum of Association, Articles of Association and other relevant documents:

The third step in the Section 8 company registration online involves preparation of the MOA and the AOA of the company. MOA is essentially the charter of a Section 8 company and it defines the scope of its activities. An AoA is a statutory document which regulates the internal management of the company. MoA of Section 8 Company must be filed in the Form INC-13.

Please note that there is no format prescribed for AoA of the Section 8 Company by the Ministry of Corporate Affairs. MoA and AoA of the company are required to be signed by each member who shall mention his/her name, address, description and occupation in the presence of at least one witness. The witness is liable to attest to the signature and shall also sign and add his/her name, address, description and occupation.

4. Filing of SPICe 32 Form:

After the approval of the name application form by the RUN facility, one must file Form SPICe 32.

Documents to be attached with the SPICe 32 Form:

  1. Memorandum of Association (MoA) in the Form INC-13
  2. Articles of Association (AOA)
  3. Declaration in the Form INC-14 by a certified CS/CA in practice that the MoA and AoA have been formulated in conformity with the provisions of Section 8 Company by the MCA. The declaration must also mention that all the requirements of the Act and the registration of the company under Section 8 and matters incidental have been complied with
  4. Declaration by each of the persons making the application in the Form INC-15
  5. An estimate of the future annual income and expenditure of the company for the next three years
  6. Name Approval Letter received from CRC
  7. Consent and Declaration by first Directors in the Form DIR-2
  8. Self-declaration by first subscribers in the Form INC-9
  9. PAN cards of the first directors and subscribers
  10. Aadhar card of the first directors and subscribers
  11. Proof of Registered office like Sale Deed/Lease Deed/Rent Agreement
  12. Latest Utility Bill of Registered office like Electricity Bill
  13. NOC of the owner of the registered office is taken on rent/lease

Now that you have seen the procedure for incorporation of section 8 company, let us check out the benefits of Section 8 company registration online in India.

Benefits of Section 8 Company Registration Online

Following are the advantages of section 8 company registration online:

  • Exemption from the Stamp Duty
  • Distinct legal identity
  • Tax concessions as per the 80G certificate or 12A registration of Income Tax Act.
  • Section 8 Companies are privileged to be formed with or without share capital. Thus, there is no minimum capital requirement in the case of section 8 company registration. The necessary funds for carrying the business are brought in the form of donations, subscriptions from members and the general public.
  • Section 8 Companies are not required to add the suffix Limited or Section 8 at the end of their names.
  • After Section 8 Company registration, the company has more credibility as compared to any other Non-profit organization structure like Charitable Trust or Society.

Total Number of Board Meetings and its Quorum

As per section 173(1) and 174(1), Section 8 company registration must have at least one meeting within a period of six calendar months and the quorum for its board meetings is eight directors or 1/4th of its total strength, whichever is less, respectively. However, one must note that the quorum should have a minimum of at least two members.

Failure for Compliances of a Section 8 company registration

After the incorporation of a Section 8 company, if the company fails to comply with the legal provisions as per the MCA, then the central government reserves the right to revoke the license issued under this act.

In case of revocation, the company may end up getting wound up. Also, it may be asked to change its name by adding either “Private or Public Limited” as the suffix. The assets remaining after clearing debts and liabilities of such a Company shall stand transferred to some other Section 8 Company having similar objects.

If the operations of the Section 8 Company registration are found to be conducted fraudulently or in violation of the objectives of the Company or are unfavorable to the public interest, the license may be revoked.

If a company defaults in complying with the provisions of the Act, it shall be levied with a fine which shall not be less than Rs.10 lakhs and may extend up to Rs.1 crore. The Directors and all other members of the section 8 company registration, who are found in default, shall be punishable with imprisonment for a term which may extend to three years, or with a fine amounting to not less than Rs. 25,000 which may extend to Rs. 25 lakhs, or both. This is provisional, provided that it is proved that the operations were conducted fraudulently.

Please note that any such order shall not be passed unless the section 8 company registration has been given a reasonable opportunity of being heard.

At Taxzona, we provide you with an all-inclusive, stress-free Section 8 Company registration which would be dealt with by our team of qualified professionals within a short time frame. Our team will take care of the documentation and aids in providing you with the realistic estimation of Section 8 company registration costs. With a bunch of highly qualified professionals at your service, there is no way your section 8 company registration can go wrong. You can always get in touch with our certified professionals at any point in time for deliberation and assistance concerning section 8 company registration and compliances throughout your journey with Taxzona. For more questions and queries, feel free to contact us:

info@taxzona.in 

+919820444477

FAQ's

The benefits of filing section 8 company registration are Avoid Penalties, Building Trust, Transparency of Operations, Avoid and Legal Issues, and Increases credibility.

Yes, a section 8 company needs to comply with the provisions of Secretarial Audit.
The directors of a section 8 company need to file Form AOC 4 within 30 days of AGM (Annual General Meeting).

The directors of a section 8 company registration need to file Form MGT 7 within 60 days of AGM (Annual General Meeting).

The due date for filing an Income Tax Return by section 8 company registration is 30 September of every Financial Year.