Overview of Section 8 Company Registration
Section 8 Company is the company registered under the Companies Act, 2013 as a Non-profit organization. As we all know NPO can be registered as- Trust by executing a Trust deed or, As a society under the Registrar of Societies, or, As a non-profit company under Section 8 Company of the Companies Act, 2013.
Section 8 Company is the most popular form of Non-profit organization that is established for the-
- Promotion of commerce,
- Social welfare,
- Protection of environment or any such other related object”.
In layman, a Section 8 company must promote public welfare and the income generated by the company can only be used to support the stated public cause(s) only.
Section 8 Company Registration
What are the Benefits of Registering a Section 8 Company?
Numerous benefits are provided to Section 8 Company. Few are mentioned below:-
- No Minimum Capital
In section 8 company registration, there is no minimum capital criteria.
- Avail Tax Benefits
Various tax exemptions and compensations are provided to the company as well as to the donors who are contributing to Section 8 Company.
- Exempted from Payment of Stamp Duty
No stamp duty is required on the Section 8 Company registration as the company is exempted from the payment of stamp duty applicable for registration.
- Separate Legal Identity
Section 8 Company has a separate legal entity as private/public company and has a distinct legal personality from its member.
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.
What are the Checklists to be Considered while Registering a Section 8 Company?
Following factors are to be considered while registering Section 8 Company:-
- The Company may be registered as a company limited by shares or by Guarantee and not with unlimited liabilities.
- It can be a holding company of another company and can promote another company.
- The company cannot be amalgamated with a company that is not a Section 8 company.
- There must be atleast 1 meeting within every six-calendar month.
- Non-applicability of Section 149(1), Section 178 of Companies Act, 2013
- Secretarial Standards are not applicable.
- No proxy by the members.
What are the Documents Required for Registering Section 8 Companies?
Below-mentioned documents are required for registering Section 8 Company:-
- The Articles of Association
- Memorandum of Association
- Declaration by the subscribers and by the directors
- A confirmation for the address of the office
- Two months utility bills copy
- Certificate of incorporation of the Outer Country body corporate [If applicable]
- A resolution passed by the global Company [If applicable]
- A recommendation declared by the promotional Company [If applicable]
- The interest of the directors from other entities [If applicable]
- Nominee’s assent
- Identity proof and residential address of the subscribers and the nominees
- Identity proof and residential address of Applicants
- The Declaration/Resolution of the unregistered companies
- DSC (Digital Signature Certificate)
- Any other document [If required]
- Proof of principal place of business
- Evidence of appointment of Authorized Signatory for GSTIN
- Either of the documents– Letter of Authorization/Copy of Resolution passed by BOD
- Managing Committee and Acceptance Letter
- Proof of identity of Authorized Signatory for the opening of a bank account
- Proof of address of Authorized Signatory for the opening of a bank account
- Specimen Signature of Authorized Signatory for EPFO
What is the Procedure to Register Section 8 Company?
For registering Section 8 Company, an applicant needs to follow the below-mentioned steps:-
- Step-1-Apply for DSC
The very first step is to apply for the Digital Signature Certificate. DSC is used for affixing the signature in the forms.
- Step 2: Name Reservation through SPICE+-
The procedure for name reservation of Section 8 Company is similar to other companies. For the same, click on the ‘SPICe+’ Form placed under ‘MCA Services’. SPICE+ form is used for name reservation of the company that includes all the steps right from the Name Reservation to Post incorporation compliances.
The applicant of Section 8 Company has to fill the name he/she wants to reserve for Section 8 Company. Provided the name shall include the words-
7. Council, and the like, etc.
- STEP-3-: Submission of SPICE+ Part A form
The applicant needs to submit the SPICE+ Part A form for Name reservation and incorporation purposes. (DIN Application is also included in the SPICE+ form).
- Step-4- Filing SPICE+ Part B for Incorporation purpose
After submitting the SPICE+ Part A, the next step is to download SPICE+ Part B in PDF format for filling the related forms are:-
4. INC-9 and URC-1) and for affixing the “DSC,”.
- Step-4-Preparing MOA & AOA
After the proper filing of the SPICE+ form, an applicant has to file MOA and AOA form Dashboard Link.
Note-All the details which are common in PART-B shall be auto-fill in MOA and AOA. Both the forms are known to be web-based forms. An applicant is required to fill in all the details in the MOA/ AOA as per the requirement of Schedule I. Also, affix the Digital Signature Certificate of all the subscribers and professional.
- Step 5: Filing the details in AGILE PRO
The next step is to fill all the details in the AGILE PRO form. Similar as Part A, the details that are common in PART-B shall be auto fill in AGILE Pro. AGILE PRO includes-
2. EPFO/ ESIC-It is mandatory to apply for ESIC and EPFO.
3. Bank Account- Opening the bank account through this form.
- Step 6: Fill requisite details in INC-9
It is done to get the Declaration by the subscriber or First director.
- Step 7: Filing of forms with MCA
An applicant shall file the respective forms with MCA after filling all the requisite details in SPICE+ and AGILE PRO. After successful submission, the documents can be submitted, and DSC can be affixed in the respective form.
- Step-8-Pre-scrutiny Check and Payment of Requisite Fees
The next step to be followed is to do a pre-scrutiny check. After a successful Pre-scrutiny check, the applicant must click on the confirmation button. Also, the applicant company is required to pay a requisite fee for “Section 8 Company” registration.
- Step-9-COI from the Registrar
If the Registrar finds the information and the documents appropriate; he will issue a Certificate of Incorporation to the applicant company.
What are the Consequences in case of Non-Compliance is done by Section 8 Companies?
Every Section 8 company needs to follow the compliance levied by Income tax authorities and Registrar of Companies. If the company fails to satisfy the requisite compliance, it can cause heavy penalties up to Rs 1 lakh in a year.
What if the Company gets Registered under Section 80G?
If a section 8 company gets itself registered under section 80G then the individual or entity donating to the Non-profit company will get a deduction of 50% from their taxable income.
As per the Finance, Act 2020, the amendment was made i.e. With effect from first June 2020, All the existing charitable and religious institutions (including NGOs) which are registered or approved under the following sections-
1. Section 12A
2. Section 12AA
3. Section 10(23C)
4. Section 80G
These are compulsorily required to switch to section 12AB for fresh registration in order to continue availing exemption under section 10 or 11.
What Annual Compliances are required to be made for Section 8 Companies as per the Companies Act 2013?
Section 8 companies are required to comply with the Annual Docility as per the Companies Act 2013-
- Two board meetings in a year
- Preservation of Books of accounts
- Compulsory audit.
- Income tax return filing.
- Filing AOC-4 and MGT-7
- Registering for 12AB.
- Adoption of financial statement.
CorpBiz Procedure for Section 8 Company Registration
Kindly utilize the steps given above to integrate legally and securely a Section 8 Company Registration and get the benefits in the form of better-quality of business activities. Our CorpBiz experts will be at your disposal for assisting you with guidance concerning Section 8 Company Registration and its compliance for the smooth functioning of your charitable business in India. CorpBiz professionals will assist you in planning seamlessly at the least cost, confirming the successful conclusion of the process.
It is advisable that an attorney with “NGO/Company Incorporation experience” must be appointed to overwhelm many of the potential pitfalls that creep around within Section 8 Company Registration and to understand the requirement in detail. The elementary information would be mandatory from your end to start the process. The Attorney will begin working on your request once all the information is provided, and the payment is received.
CorpBiz is one of the platforms which coordinate to fulfill all your legal and financial requirements and connect you to consistent professionals. Yes, our clients are pleased with our legal service! Because of our focus on simplifying legal requirements, they have consistently regarded us highly and providing regular updates.
Our clients can also track at all times the progress on our platform. If you have any questions about the Section 8 Company Registration process, our experienced representatives are just a phone call away. CorpBiz will ensure that your communication with professionals is charming and seamless.
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Frequently Asked Questions
Yes, one person company may transform itself into a private/ public company, and then re-generation of such private/public organization into Section 8 is reasonable.
No. Section 8 Companies are out from the responsibility of appointment of independent director.
Yes. As per 'rule 8(7) of the Companies (Incorporation) Rules, 2014', for the Companies under 'Section 8 of the Act', the name should include the words foundation like etc.
No relaxation is provided by any state on issue of share certificates. (Depends on cases)
Section 8 company shall include the words :-
- Council, and the like, etc.
Yes, for section 8 company registration it is necessary to have 2 directors.
No, there shall be at least 2 members to incorporate a Section 8 company.
In general, it takes 20-30 days and the time taken to register a company depends on the query raised by the department in case of the absence of requisite documents or incorrect information.