Section 8 Company Registration
Section 8 Company is different than any other form of a company in various aspects and the income of the company must be used to promote only charitable objects. This type of Company incorporated for charity, social welfare, social promotion, their main aim is to promote social welfare and work for society, not to earn profits. Contact us to register your Section 8 Company with the experts Advise.
Section 8 Company is a company that is registered under the Companies Act, 2013 for charitable or non-profit purposes. However, this Company is similar to a Trust or Society; an exception is that a Section 8 Company is registered under the “Ministry of Corporate Affairs (MCA)” of the Central Government while the Societies and Trusts are registered under the regulations of the State Government.
However, Section 8 has numerous advantages as compared to Trust or Society and also has better credibility among donors, departments of government, and other stakeholders.
Further, the key feature of this Company is that it is possible to incorporate the company name without using the word “Limited” or “Private Limited” as the case maybe.
Section 8 Company shall has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other similar or identical object. Section 8 Company shall intends to apply its profits only in promoting its objects and shall not pay any dividend to its member.
Benefits of registering Section 8 Company
No minimum capital: As compared to other companies, section 8 companies don’t require any prescribed minimum paid-up share capital.
Less stamp duty: There is minimum stamp duty liveable at the time of While incorporating section 8 companies.
Tax Benefits: Section 8 company can get the benefit, if it gets registration under section 80G and 12AA of IT act.
Numerous Tax exemptions are provided to Section 8 Companies, specifically to the donors who are contributing to Section 8 Companies, they can claim the Tax exemption against the donation they made to a Section 8 company.
Separate Legal Identity: Section 8 Company has a separate legal entity as private or public company and has a distinct legal personality from its member.
Credibility : Section 8 Company has more credibility as compared to any other form of a charitable organization.
Transfer Of Ownership: Members of Section 8 Company members can easily transfer the ownership of the company.
No suffix : Section 8 companies may not use suffixes like the private limited company or limited company, it is optional for them.
Factors of consideration while registering a Section 8 Company
- The Company shall not be registered as a Company with unlimited liabilities company, However, I may has to be limited by shares or by Guarantee.
- The company cannot be amalgamated with a company that is not a Section 8 company.
- It can be a holding company of another company and can promote another company.
- No member can be appointed as a remunerated officer of the Company
- No remuneration / benefit shall be paid to a member being a servant / officer of the Company (except reimbursement of out of pocket expenses, reasonable interest on money lent or reasonable rent on the premises)
- Section 8 Company cannot amend or alter the Memorandum of Association or the Articles of Association without having the approval of the Central Government beforehand.
- The Central Government imposes many compliances on Section 8 companies. All the rules and regulations must include in the Memorandum of Association and Articles of Association.
Documents required for Incorporation of Section 8 Company
Identity and Address Proof of Directors and members
- Passport size photographs of the directors
- Copy of Aadhar Card
- Copy of Driving License or Voter ID or Passport
- Copy of PAN Card
- Copy of bank statement or electricity bill or mobile bill (not older than two months)
- Copy of Passport
Proof of Registered Office
- Copy of electricity or any other utility bill (not older than two months)
- Rent agreement or lease deed(if rented)
- No Objection Certificate (NOC) from the owner of the property
Process for Incorporation of Section 8 Company
1.Application for DSC
The very first step is to apply for the Digital Signature Certificate. DSC is used for affixing the signature in the forms.
Name Reservation Through SPICE+ PART A-
The procedure for name reservation of Section 8 Company is like other companies. The applicant of Section 8 Company must fill the name he/she wants to reserve for Section 8 Company. Provided The Name of Section 8 Company must include the following words in its name:
Federation / Chambers / Foundation / Forum / Association / Confederation / Council etc.
The Name approved by ROC is valid for 21 Days. Hence, Application for incorporation shall be made before the validity of name approval.
3.Preparing MOA & AOA
Memorandum of Association (MOA) and Articles of association (AOA) shall be prepared as specified in Act along with the affixation of subscribers’ photographs. Proper care shall be taken care at this stage as any amendment in MOA and AOA in later stage of the Company requires approval of Central Government.
4.Application for Incorporation through SPICE+ Part B
After Name Approval, Application for incorporation of Company shall be made in SPICe + PART B which will contain all the detail related to incorporating company like number total number of directors and members, Authorized share capital, paid-up capital, number of share hold by members, company registered address detail, directors and member detail and will required attachments for proof. Then draft the MOA (memorandum of association) and AOA (Article of Association) of the proposed company, then fill form required for EPFO and ESIC registration with detail, then Fill the AGILE form for procuring GSTIN.
For section 8 company applicants need to attach additional documents with SPICe+ form in part –B
- The physical copy of MOA draft duly signed by members and witnesses
- The physical copy of AOA draft duly signed by members and witnesses
- Declaration in form INC-14 by any practicing professional
Approval of application for Incorporation
If the Registrar finds the information and the documents appropriate; he will issue a Certificate of Incorporation to the applicant company.
FAQs
Annual Compliances of Section-8 Companies
A Section 8 company must adhere the following compliances:
Appointment of An Auditor:
First Auditor shall be appointed upto the date of first AGM.
Subsequent auditor shall be appointed for a period of 5 years. It should be appointed within 15 days of AGM.
Maintenance of Statutory Registers:
It is mandatory to maintain a statutory register of members, loans obtained, charges created, its directors, etc.
Annual General Meeting:
Annual general meeting is to be conducted once a year within 6 months of the end of financial year and there should not be more than 15 months gap between 2 meetings.
Board Meeting:
Board Meeting should be held once in every six Calendar months.
Tax Returns:
The ITR is required to be filed on or before 30th September every year.
Disclosure of interest:
Disclosure of Interest should be given by every Director to the Company in form MBP-1 in the first Board Meeting held in every Financial Year and at the time of change in details already submitted earlier.
Notice of non-disqualification of Directors:
Notice of non-disqualification of Directors to be given by every Director to the Company in form DIR-8 in the first Board Meeting held in every Financial Year.
KYC of Directors:
It should be given in Form DIR-3 KYC by director on or before September 30th of every Financial Year.
Delay in payment of MSME Vendor
If a company makes a delay in making payment beyond 45 days to Micro, medium and Small Enterprises, then company has to MSME-1 half yearly i.e. From April to September, due date is 31st October and from October to march, the due date is 30th April to ROC
Return of Deposit or particulars of transaction not considered as deposit or both:
It should be filed in DPT-3 On or before June 30th of every Financial Year.
Filing of Board Resolution for approval of Financial Statement and Board’s Report:
Form MGT-14 is to be filed by Public Section 8 Company within 30days of Board Meeting
Financial Statements:
The financial statement has to be filed E Form AOC-4 within 30 days from the date of annual general meeting.
Annual Returns:
The annual return of the company has to filed in E Form MGT-7 within 60 days of the annual general meeting
Process for Incorporation of Section 8 Company
1.Application for DSC
The very first step is to apply for the Digital Signature Certificate. DSC is used for affixing the signature in the forms.
Name Reservation Through SPICE+ PART A-
The procedure for name reservation of Section 8 Company is like other companies. The applicant of Section 8 Company must fill the name he/she wants to reserve for Section 8 Company. Provided The Name of Section 8 Company must include the following words in its name:
Federation / Chambers / Foundation / Forum / Association / Confederation / Council etc.
The Name approved by ROC is valid for 21 Days. Hence, Application for incorporation shall be made before the validity of name approval.
3.Preparing MOA & AOA
Memorandum of Association (MOA) and Articles of association (AOA) shall be prepared as specified in Act along with the affixation of subscribers’ photographs. Proper care shall be taken care at this stage as any amendment in MOA and AOA in later stage of the Company requires approval of Central Government.
4.Application for Incorporation through SPICE+ Part B
After Name Approval, Application for incorporation of Company shall be made in SPICe + PART B which will contain all the detail related to incorporating company like number total number of directors and members, Authorized share capital, paid-up capital, number of share hold by members, company registered address detail, directors and member detail and will required attachments for proof. Then draft the MOA (memorandum of association) and AOA (Article of Association) of the proposed company, then fill form required for EPFO and ESIC registration with detail, then Fill the AGILE form for procuring GSTIN.
For section 8 company applicants need to attach additional documents with SPICe+ form in part –B
- The physical copy of MOA draft duly signed by members and witnesses
- The physical copy of AOA draft duly signed by members and witnesses
- Declaration in form INC-14 by any practicing professional
Approval of application for Incorporation
If the Registrar finds the information and the documents appropriate; he will issue a Certificate of Incorporation to the applicant company.
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