{"id":1125,"date":"2019-11-13T13:33:57","date_gmt":"2019-11-13T13:33:57","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=1125"},"modified":"2021-03-24T14:38:06","modified_gmt":"2021-03-24T09:08:06","slug":"what-are-section-8-companies","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/","title":{"rendered":"What are Section 8 Companies? Know its provisions and Incorporation Procedures"},"content":{"rendered":"\n<p class=\"has-drop-cap\">All companies in India are\nnot operating for the profit purpose. Many companies primarily operate for the\ncharitable and non-profit objectives. The company registered under the Section\n8 of the Companies Act 2013, is known as Section 8 Company.<\/p>\n\n\n\n<p>According to Section 8 of the companies Act, 2013 such companies are established for the promotion of commerce, art, science, sports, social welfare, charity, protection of any environment or any other such charitable objects. As per rule 8(7) of the companies Incorporation Rules, 2014 for the companies under Section 8 of the Act, all the section\u00a0 8 companies are named and registered as an Association, Foundation, Society, Club, Organization etc. These companies are registered under Ministry Of Corporate Affairs, Government of India.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#What_are_its_provisions\" >What are its provisions?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#Advantages_of_Section_8_Company\" >Advantages of Section 8 Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#Disadvantages_of_Section_8_Company\" >Disadvantages of Section 8 Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#Eligibility_for_forming_Section_8_Companies\" >Eligibility for forming Section 8 Companies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#Requirements_for_Online_Registration_of_Section_8_Company\" >Requirements for Online Registration of Section 8 Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#What_are_the_Procedures_For_Registration_of_Section_8_Company\" >What are the Procedures For Registration of Section 8 Company?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#Penalty_under_Section_8_Companies\" >Penalty under Section 8 Companies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/what-are-section-8-companies\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_its_provisions\"><\/span>What are its provisions?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Section 8 companies\nintend to apply its profits in promoting or helping out the needful and intend\nto prohibit the payment of any dividend to its members. Section 8 companies\nwork towards the transformation of the society rather than just earning profit.\nThese companies were earlier defined under Section 25 of Companies Act, 1956.\nThe companies under Section 8 are easy to register as compared to Trusts and\nSocieties. The Central government provides license to these companies stating\nall the guidelines. Companies failing to do so are ordered to wind up their\ncompanies.<\/p>\n\n\n\n<p>Examples of Section 8 companies are the\u00a0<strong>Federation of Indian Chambers of Commerce and Industry (FICCI<\/strong><sup><a href=\"http:\/\/ficci.in\/\"><strong>[1]<\/strong><\/a><\/sup><strong>)\u00a0<\/strong>and Confederation of Indian Industries (CII).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_of_Section_8_Company\"><\/span>Advantages of Section 8 Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Following is the list of\nadvantages of the Section 8 Companies over trust and societies:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"611\" height=\"408\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-18.png\" alt=\"Advantages of Section 8 Company\" class=\"wp-image-28064\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-18.png 611w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-18-300x200.png 300w\" sizes=\"(max-width: 611px) 100vw, 611px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Tax Benefits<\/h3>\n\n\n\n<p>Section 8 companies are\nexempted from the provision of income tax. Also, these companies get other tax\nbenefits and deductions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Zero stamp Duty<\/h3>\n\n\n\n<p>Unlike other companies,\nSection 8 companies do not need to pay stamp duty on the AOA and MOA of the\nprivate or public limited companies.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Ease of transferring the ownership or title<\/h3>\n\n\n\n<p>According to the Income Tax\nAct, 1961, Section 8 Companies can transfer their ownership or title. Also, the\ninterest and shares of other members of the company is also considered as\nmovable property and are easy to transfer which in turn makes it easier for the\nmembers to leave and transfer its ownership to others.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Exempted from the title \u201cLimited\u201d<\/h3>\n\n\n\n<p>Section 8 companies are\nexempted from using the word \u201cLimited\u201d unlike other companies like&nbsp;<a href=\"https:\/\/corpbiz.io\/company-registration\"><strong>private limited company<\/strong><\/a>&nbsp;and public limited\ncompany. However it is mandatory for the section 8 companies to use the suffix\nsuch as Foundations, associations etc.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Higher Credibility<\/h3>\n\n\n\n<p>Section 8 companies are more credible than other non-profit organizations like societies or trust. The licensing of these companies is done by the Central government. So, no changes can be made in the AOA and MOA of the Company.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Disadvantages_of_Section_8_Company\"><\/span>Disadvantages of Section 8 Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Now, let\u2019s have an eye on\nthe disadvantages of the Section 8 Companies which are listed below:<\/p>\n\n\n\n<ul><li>The profit that the section 8 Companies make is used for the meeting the objectives like arts, commerce, science. It cannot be used by the director or shareholders by any means.<\/li><li>The members of the Section8 Companies cannot be appointed as the officer.<\/li><li>The members cannot make changes in the MOA and AOA of the company because the licensing is done by the Central government.<\/li><li>The profit earned by the Section 8 companies cannot be distributed among its members. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_for_forming_Section_8_Companies\"><\/span>Eligibility for forming Section 8 Companies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>&nbsp;A company which\nintends to be registered under the Section 8 of the Companies Act, 2013 should\nkeep these rules in mind before registering<\/p>\n\n\n\n<ul><li>The company\u2019s objective should be promoting fields like arts, science, commerce, education, religion etc.<\/li><li>The company should use the profit from the organization in promoting the objectives of the company.<\/li><li>The company should restrict the share of dividends to its members.<\/li><li>Section 8 companies can only be registered as Private or Public Limited. It cannot be registered as\u00a0<a href=\"https:\/\/corpbiz.io\/one-person-company\"><strong>one person Company<\/strong><\/a>\u00a0(OPC).<\/li><li>The company must confirm the proposed name, its objectives, registered office address,  authorized capital, proposed Director and the members.<\/li><li>The name of the company should reflect the charitable objective. Also the proposed name must be different from the category of undesirable names specified in Rule of Companies Act.<\/li><li>The company\u2019s name must include the words like Foundation, Forum, Association, Chambers, council etc.<\/li><li>Requires license from the Central Government.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Requirements_for_Online_Registration_of_Section_8_Company\"><\/span>Requirements for Online Registration of Section 8 Company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>The company must be governed by the Companies Act, 2013.<\/li><li>Minimum 2 Directors if the company is to be incorporated as a private limited company.<\/li><li>Minimum 3 Directors if the company has to be incorporated as Public Limited Company.<\/li><li>No minimum share capital is required. All the funds are brought through donations from the general public.<\/li><\/ul>\n\n\n\n<p><strong>Documents Required for  <\/strong><a href=\"https:\/\/corpbiz.io\/section-8-company-registration\"><strong>Section 8 Company Registration<\/strong><\/a><\/p>\n\n\n\n<ul><li>Aadhar Card or Pan Card of all Directors<\/li><li>Passport Size Photographs<\/li><li>Voter ID\/Aadhar Card of all Directors<\/li><li>Self attested copy of address proof like Bank statement, Mobile bills, electricity bills(not older than 2 months)<\/li><li>Registered Office Documents<\/li><li>Rent\/lease agreement<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_Procedures_For_Registration_of_Section_8_Company\"><\/span>What are the Procedures For Registration of Section 8 Company?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"614\" height=\"323\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-19.png\" alt=\"Procedures For Registration of Section 8 Company\" class=\"wp-image-28065\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-19.png 614w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/03\/image-19-300x158.png 300w\" sizes=\"(max-width: 614px) 100vw, 614px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Apply for Digital Signature Certificate (DSC)<\/h3>\n\n\n\n<p>Digital Signature is the\nonline signature used for filing and is issued by Ministry of Corporate affairs\n(MCA). A digital signature is a secure digital key issued for the purpose of\nvalidating and certifying the identity of the person. Some of the certified authorities\nwhich issue the digital signature certificate are E- mudra, national\nInformatics Centre, Code Solutions and Indian Institute of development research\nin banking technology. The\ndocuments required while applying for DSC are: <\/p>\n\n\n\n<ul><li>Photo ID \u2013  Voter ID or PAN or Driving License<\/li><li>Address  Proof- Voter ID, Utility Bill, Bank Statement (Utility bills and Bank  Statement must not be older than 2 months)<\/li><li>Photo of  the applicant <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">For&nbsp;Name&nbsp;Availability<\/h3>\n\n\n\n<ul><li>Shall give the proposed name and it is mandatory to use the words Foundation, Association etc. for Sec8 company.<\/li><li>Main  object of the company.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">For&nbsp;SPICE+ form\u2013\nApplication for Incorporation Certificate<\/h3>\n\n\n\n<ul><li>Memorandum of Association<\/li><li>Articles of Association<\/li><li>All the subscribers PAN number to the Memorandum (1<sup>st<\/sup>\u00a0Directors      of the company)<\/li><li>Address Proof, ID and other contact details of the subscribers to the      Memorandum. <\/li><li>Notarized Rent Agreement from the Registered Office.<\/li><li>Non Objection Certificate from the owner to use the premises<\/li><li>The premises utility bill not older than last 2 months<\/li><li>Declaration from all the directors under form INC 15 <\/li><li>Declaration by the Chartered Accountant under Form INC 14 <\/li><li>Anticipated Income and Expenditure for next 3 years in the approved Format.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">&nbsp;For&nbsp;AgilePro&nbsp;<\/h3>\n\n\n\n<ul><li>Name of the Bank where company is preparing to open Bank Account.<\/li><li>Specimen Signature for EPFO<\/li><li>Non Objection Certificate to open a bank account<\/li><li>For\u00a0<strong>GSTN<\/strong> &#8211; declaration of Authorized signatory <\/li><\/ul>\n\n\n\n<p><strong>Step 2:<\/strong><\/p>\n\n\n\n<p>1. To check the&nbsp;name availability with the RUN utility,<\/p>\n\n\n\n<p>2. To Login with the MCA website<\/p>\n\n\n\n<p>3. To fill in the online form and attach the object clause\nand Submit<\/p>\n\n\n\n<p><strong>&nbsp;Important:&nbsp;<\/strong>As the validity of the approved name for the company is for 20 days, so SPICE+ is required to be filled<strong> within 20 days<\/strong>&nbsp;after the name is\napproved.<\/p>\n\n\n\n<p><strong>Step 3:<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Filling of&nbsp;Web\nForm Spice +<\/h3>\n\n\n\n<p>Once the name is approved,\nthe Spice forms shall be\nfilled for further process. <\/p>\n\n\n\n<p><strong>Procedure to fill the Web Form:<\/strong><\/p>\n\n\n\n<ol><li>Login to the MCA website<\/li><li>MCA services> open Spice +<\/li><li>Select the Existing Application<\/li><li>Fill in the complete form and attach all the documents in the attachments section. <\/li><li>Along with Spice+, the INC9 and Agile Form shall be filled.<\/li><li>After Submission, download the forms for verifying and affix DSC.<\/li><li>Submit with the required fees all the three Forms as LINKED Forms at MCA website.<\/li><li>After the SPICE and AGILE is approved &#8211; Incorporation Certificate and License No. is granted and shall have Company Identification No. (CIN), Incorporation Date, PAN and TAN of the company.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Penalty_under_Section_8_Companies\"><\/span>Penalty under Section 8 Companies<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If any company under\nSection 8 Companies Act, 2013 fails to comply with the terms and regulations of\nSection 8, then according to the provisions of Sub-section (11), the Company\nshall be held punishable and have to pay:<\/p>\n\n\n\n<ul><li>A minimum fine of INR 10 Lakhs which can extend to INR 1 Crore.<\/li><li>The Concerned Director is punishable and will face the imprisonment for a term of three years with a fine of minimum INR 25000. The fine can also extend to INR 25 Lakh.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 8 Companies primarily operate for charitable and non-profit objectives which are for the well-being of our society. Also, it has got several exemptions in terms of tax and others.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/relaxations-given-to-section-8-companies-under-company-law\/\">What are the Relaxations given to Section 8 Companies under Company Law?\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>All companies in India are not operating for the profit purpose. Many companies primarily operate for the charitable and non-profit objectives. The company registered under the Section 8 of the Companies Act 2013, is known as Section 8 Company. According to Section 8 of the companies Act, 2013 such companies are established for the promotion [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":1127,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[325],"tags":[185],"acf":{"service_id":"11"},"authorName":"Shalini Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/09\/MEE.jpeg","authorDescription":"Shalini is a B.tech graduate but her keen interest in writing impelled her to continue as a content writer. Further, She has a rich experience in Companies Act and Ammendment related topics.","postViews":22574,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/1125"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=1125"}],"version-history":[{"count":31,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/1125\/revisions"}],"predecessor-version":[{"id":28077,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/1125\/revisions\/28077"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/1127"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=1125"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=1125"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=1125"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}