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Section 8 Company Registration:- Process, Fees & Document List

How many of you are wondering for the incorporation of section 8 company? If you are one of them, then this post is for you. Section 8 company is a non-profit organization, which has objective to promote charitable, art, science, education and sports. The gained profit from section 8 company is majorly utilized for promoting these objectives. 

These companies are established for the betterment of the society, if you aim to register section 8 company then read the blog carefully. We will be discussing section 8 company registion, fees, document list and more of it. For professional guidance, you may contact to CRSPL Business Consultants, they will assist you for incorporation.

As per the Companies Act 2013, section 8 company is defined as a organizations, which has aim to promote art, commerce, science, research, sport, charity, social welfare, religion, environmental protection and other similar activities. These organization utilize their profit to promote these activities and do not distribute dividend to shareholders.

Section 8 company is established to promote non-profit activities as per the provisions of Company Act 2013. Main objective of registering section 8 company is to promote and encourage non-profitable goals. For section 8 company registration minimum 2 directors are required, as like other companies there is no requirement of min paid-up capital to set-up.

Key Points about Section 8 Company

  • In India, a non-governmental organization can be registered under the Registrar of Society or as a non-profit entity under section 8 company of the Companies Act, 2013.
  • As per the section 8 company registration, the generated profit from non-profit entity can be utilized for charitable objectives, also the profit is not distributed among shareholders.
  • Section 8 companies are more similar to erstwhile section 25 company under the Company Act 1956, these are not recognized as section 8 companies, as per the prevailing Company Act.
  • Section 8 companies are required to comply with the provisions for Company Act 2013, they are also required to maintain the books of accounts file returns with ROCs (Registrar of Compliances) and also comply with GST and IT Act.
  • Any changes in the charter documents such as AOA (Articles of Association) and MOA (Memorandum of Association), will require a government consent.

Benefits of Section 8 Company Registration

  1. It is eligible for 100% tax exemption under 80G and 12AA of the Income Tax Act.
  2. There is no minimum capital requirement for Section 8 Companies.
  3. Section 8 companies enhancing their credibility for legal standing.
  4. Section 8 companies are not subject to CARO.
  5. Exemptions to the donors who donate cash or other than cash to section 8 companies.
  6. Exemption of stamp duty when registration.
  7. Company Secretary no longer mandatory to section 8 companies
  8. No necessity of record of minutes unless specified.
  9. Independent director not required.
  10. Relaxation in the restrictions of loan and investments by company.
  11. There is no requirement to add word Limited or Private limited in the name of the section 8 companies.

Mandatory legal requirements for Section 8 Company

1. Directors:- At least two directors if private limited company and three directors if public limited company.

2. Members:- At least two members and not more than 200 if the private limited company and there is no maximum limit if a public limited company.

3. Minimum Capital Requirement and Name:- As per the Company Act 2013, Section 8 entities are not required to maintain minimum paid-up capital.

4. Company Objects:- Entities with non-profit objectives are eligible for Section 8 company registration, generated profit will be donated for charitable purposes and not distributed among members.

5. Indian Director:- There will be at least one director who is an Indian resident in the company.

Eligibility Criteria for Section 8 Company Registration

The eligibility criteria must be met in order to establish a Section 8 company registration:-

  • An Indian national and HUF (Hindu Undivided Family) is eligible to incorporate a section 8 entity.
  • The entity must have at least one director.
  • The primary object of the section 8 company should be to promote art, science, sports, and charitable activities.

The eligibility criteria ensure the Section 8 company is operated with the objective of promoting social welfare and contributing to the betterment of society. 

Documents Required for Section 8 Company Incorporation

The following documents are required to complete the incorporation process for a Section 8 company in India:

  • Articles of Association (AOA) and Memorandum of Association (MOA)
  • Declaration by professional that MOA and AOA is in conformity with the provisions of section 8 and rules thereunder
  • Declaration by the first director(s) and subscriber(s)
  • Proof of office address, such as electricity, water, or gas bill not older than 2 months
  • Projection of the future annual income and expenditure of the company for next three years, specifying the source of income and the objects of the expenditure
  • Copy of the certificate of incorporation (COI) of an overseas corporate body (if any)
  • Consent of Nominee (INC-3) if any, if body corporate is a subscriber
  • Residential and identity proof of directors, nominees and subscribers
  • Digital Signature Certificate (DSCs) of all the directors and subscribers
  • Declaration by all the persons making application
  • NOC from the owner of the property if rented
  • Specimen signatures of all the directors

Section 8 Company Registration Process

1. Obtain Digital Signature Certificate (DSC)

The initial step is to apply for DSC (Digital signature certificate) for all the directors and subscribers of Section 8 company

3. Reserve the Company Name

Reserve the Company Name with the MCA with the prescribed fees. The name should be unique and it should not be similar to other existing companies.

4. File the Application for Section 8 Company Incorporation 

After the reservation of the name then file the application forms like SPICe+, MOA, AOA, etc for Section 8 Company Incorporation on the MCA portal with the prescribed fees. 

6. Obtain a Certificate of Incorporation 

Once the application of company incorporation is approved, you will receive the Certificate of Incorporation with the Company PAN and TAN.

Note:- Fees for the application

  • The fees will depend on the amount of share capital if limited by shares.
  • The fees will depend on the amount of guarantee if limited by guarantee.

Donation or Funding of Section 8 Company

As per the provisions, section 8 company can not collect capital through deposits but can accept donations from public. There are multiple ways to raise funds such as domestic donation, foreign donation, and equity funding.

  • If FCRA registration is successful obtained then foreign contribution is allowed, it can be applied for 3 years after registration.
  • In case of immediate foreign contribution requirement, permission from the commissioner can be requested.
  • Equity funding can be obtained too, by realizing new equity shares at a premium price, in case of domestic subsidies, there is no restrictions but it is also essential to build guidelines to prevent money laundering.