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

How many of you are wondering about the incorporation of a 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 the objective to promote charitable, art, science, education, and sports. The profit gained from the Section 8 company is mainly utilized for promoting these objectives. 

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

As per the Companies Act 2013, a section 8 company is defined as an organization that has the 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 dividends to shareholders.

Section 8 company is established to promote non-profit activities as per the provisions of the Companies Act 2013. The main objective of registering a Section 8 company is to promote and encourage non-profit goals. For section 8 company registration, a minimum of 2 directors is required. As with other companies, there is no requirement for minimum 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 Societies 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 a non-profit entity can be utilized for charitable objectives, and the profit is not distributed among shareholders.
• Section 8 companies are more similar to erstwhile section 25 companies under the Companies Act 1956; these are not recognized as section 8 companies, as per the prevailing Companies 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 and file returns with ROCs (Registrar of Companies) and also comply with GST and the IT Act.
• Any changes in the charter documents, such as the AOA (Articles of Association) and MOA (Memorandum of Association), will require 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 are 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 on registration.
7. Company Secretary no longer mandatory for Section 8 companies
8. No necessity for a record of minutes unless specified.
9. Independent director not required.
10. Relaxation of the restrictions on loans and investments by the company.
11. There is no requirement to add the words 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 a private limited company, and three directors if a 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 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 to promote social welfare and contribute 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)
• A declaration by a professional that the MOA and AOA conform to the provisions of section 8 and rules thereunder
• Declaration by the first director(s) and subscriber(s)
• Proof of office address, such as an electricity, water, or gas bill, not older than 2 months
• Projection of the future annual income and expenditure of the company for the 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 the 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 an 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 a DSC (Digital Signature Certificate) for all the directors and subscribers of a Section 8 company

2. 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.

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

4. Obtain a Certificate of Incorporation 
Once the application for 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, a Section 8 company can not collect capital through deposits but can accept donations from the public. There are multiple ways to raise funds, such as domestic donations, foreign donations, and equity funding.

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