Complete Procedure for Section 8 Company Registration

The act of humanity has become a thing of the past. Nowadays, everyone is busy watering their dreams with an urge to earn more money. In such a materialistic world, Section 8 Companies seems to be an absolute blessing. Unlike, other organization of the corporate realm, Section 8 Company is the one that solely works for social welfare. If you also seek to establish a Section 8 Company and serve the nation, then it is essential to meet some criteria. This write-up will guide you about Section 8 Company Registration procedure, eligibility, documentation and other related attributes.

A brief about Section 8 Company

Companies Act, 2013 defines Section 8 Company as an organization that predominantly aims to promote the fields of Art, Education, Sports, Social Welfare, Commerce, Research, Charity, Environment, Science, Religion and other similar objects. Such companies are one of the most popular NGO’s in India. The members of a Section 8 Company do not get a fair share of the company’s profit; instead, it is only utilized to foster the original objective.

These companies share similar characteristics of a Trust or a Society except that the Central Government conducts surveillance of Section 8 Company under Ministry of Corporate Affairs.

Eligibility criteria to register a Section 8 Company

Here is the list of things that you must comply with before undertaking the Section 8 Company Registration procedure:

Minimum two shareholders are required to form a Section 8 Company;

Also, it must have at least two Directors (both Directors and shareholders can be the same in the case of Section 8 Company);

One of the Directors should be a resident of India for at least 182 days;

There is no minimum capital requirement for Section 8 Company Registration;

It is mandatory to possess PAN if the Section 8 applicant is an Indian.

Documents Required for Section 8 Company

The checklist of documents that an applicant must attach along with Section 8 Company Registration Form:

Identity proof of all Promoters or Directors (a self-attested copy of their PAN Card)

Residential proof of all the Directors or Promoters such Aadhar Card, Driving License, Voter ID, etc.

Utility Bill/ Electricity of the Registered Office

Address proof of the Registered Office like Rent Agreement, Letter of Possession or Lease Agreement

Passport-size photograph of Directors

Memorandum of Association (MOA)

Articles of Association (AOA)

DIR-2 Form to act as Director

If the Director has previously served his part in any other company, then he must provide the details of being his Director previously

INC-9 declaration by Directors

Reasons to carry Section 8 Company Registration

Following are the benefits of Section 8 Company registration procedure:

No minimum capital requirement

The biggest advantage of setting a Section 8 Company is that it does not require any minimum capital, unlike other Limited Companies like One person, Public or Private. Moreover, the members of a Section 8 Company can directly access funds from public donations or subscriptions.

Immune from any title

Section 8 Companies do not have to add ‘limited’ in the suffix of its name. Thus, these companies can function without notifying the public about their limited liability status.

Zero Stamp Duty

Section 8 Companies are free of the Stamp Duty payment that Private or Public Limited companies pay during Registration.

A separate legal entity

Companies registered under Section 8 have a distinct legal entity. It implies that such a company will keep on existing even after the death or insolvency of its members.

Tax Exemptions

Being a non-profit organization, Section 8 Companies avails the tax exemption. These companies also leverage several other tax benefits, deductions under Section 80G of Income Tax Act.

Steps to Register Section 8 Company

The process of Section 8 Company Registration is demonstrated below:

Attain Digital Signature Certificate and File Form DIR-3

Allotment of DIN

File INC for Name Approval

File Form INC-12 for Grant of Section 8 License

Issuance of Section 8 Company License

File SPICe Form with ROC

Attain DSC and file Form DIR-3

The first step for Section 8 Company incorporation is to attain a Digital Signature Certificate (DSC) of all the proposed Directors. Therefore file Form DIR-3 with the Registrar of Companies to obtain Director Identification Number (DIN). Attach ID and Address proof along with the form.

Allotment of DIN

If the Registrar of Companies (ROC) approves the validity of the provided information, it will then offer DIN to the proposed Directors.

File INC for name approval

Name is the identity of a company so now you need to file a RUN Form name approval with the ROC. The applicant must propose at least two names in the preferential order. Therefore, the ROC will approve one of the names based on the availability.

File Form INC-12 for grant of Section 8 License

Once the name of the company gets approved, it’s time to file Form INC-12 with Registrar of Companies. It is an application for the permit of operations as a Section 8 Company. Affix the documents given below with Form INC-12:

Memorandum of Association (MOA) & Articles of Association (AOA);

Declaration attested by a practicing Chartered Accountant;

A declaration from each member filing the application;

Evaluated income and expenditure of the succeeding three years.

Issuance of Section 8 Company License

After an extensive examination of the documents and form, ROC will give an approval if it finds it to be valid and authentic. Thus, ROC will issue Section 8 Company License in Form INC-16.

File SPICe Form with the ROC

Lastly, file SPICe INC-32 with ROC for Section 8 Company incorporation and attach the prescribed documents such as:

An affidavit from every Director/Promoter;

KYC and Consent Letter of each Director;

Form DIR-2 with ID and Address proof;

Utility bills as a proof of Registered Office (it must not be older than two months);

No Objection Certificate (NOC) from the landlord in case the office premise is on rent;

MOA & AOA;

Declaration in regards to deposits;

If the Registrar of Companies affirms to the documentation, he will issue a Certification of Incorporation and grant a unique Corporate Identity Number to the newly formed Section 8 Company.

Conclusion

Section 8 Company Registration is a lengthy procedure that takes about 15-20 days. Since a layman cannot draft the documentation singlehandedly, it is wise to seek professional assistance from a legal firm.

One such reputed legal consultant is Swarit Advisors. We provide end-to-end assistance in Section 8 Company Registration.