FAQs on Section 8 Companies
Section 8 companies are Not-for-Profit organizations that are registered under the Companies Act, 2013 with a special motive of working for the welfare of the society at large. Their main objective is to promote the welfare activities in the country without thinking of monetary benefit from it. We will discuss various FAQs on Section 8 companies in this article that will solve your queries related to Section 8 companies.
A Section 8 company is one of the various forms of company incorporation in India, and almost all the forms of company incorporation have a similar process of incorporation but if you want to know the detailed Section 8 company registration process you can refer to this page – Section 8 company registration as NGO
Who can apply for registration of a Section 8 company?
Any individual or a group of persons who serve a similar motive of serving society and have welfare objectives can register a Section 8 company. A Section 8 company must satisfy the below-mentioned criteria as defined by the Government of India.
- The objectives of a Section 8 company include promotion of art and culture, trade, commerce, education, health, sanitation, charity, religious activities, protection of the environment and animal husbandry, etc.
- A Section 8 company intends to apply its profits only for welfare purposes or with the intention mentioned above.
- A Section 8 company is not allowed to pay dividends to its members and shareholders.
What is the process of section 8 company incorporation?
To incorporation of section 8 company, an application has to be made with the Registrar of the Companies with Form INC-12, under Section 8 of the Companies Act, 2013. The following documents have to be attached along with the application form.
- Submit a draft of the MoA(Memorandum of Association) and AoA( Article of Association) of the company in the exact format prescribed by the government.
- A declaration is to be attached in Form INC-14, duly notarized by the concerned authorities.
- An estimate of the annual expenditure and income sources of the company.
- A declaration through Form INC-15, duly signed by the authority responsible for making the application.
- Form INC-9 is to be submitted by each subscriber or director of the company.
What are the rules for naming a Section 8 company?
To name a section 8 company it is very important to take care of the terms that are included in the name of the company. As per company incorporation rules mentioned under Section 8 of the Companies Act, 2013. It is important to include terms like federation, council, foundation, forum, chambers, confederation, electoral trust etc. and the omitted words are Pvt Ltd, Ltd, Public Ltd, etc.
Who is authorized to issue a license to a Section 8 company?
The Central government has authorized the Registrar of the Companies(ROC) to issue licenses to Section 8 companies as per the Companies Act, 2013.
Can a one-person company(OPC) be incorporated as or converted to a Section 8 Company?
The absolute answer to this question is NO. As per Rule 3 of the Company incorporation, it is prohibited for an OPC to be incorporated as or converted to a Section 8 company. But an OPC can be converted to a Public/Private limited and then to a Section 8 company.
Can a Trust or a Cooperative society become a member of a Section 8 company?
Yes, a Trust or a cooperative society can become member of a Section 8 company as there is no restriction for them in the Companies Act, 2013.
Can a Section 8 company accept donations and grants from overseas and foreign organizations or individuals?
In order to receive donations and grants from Non-resident Indians or foreign organizations, a Section 8 company has to comply with the rules and requirements mentioned under the Foreign Contribution and Regulation Act.
Can a Company registered under Section 8 be converted to some other company such as a Private Limited, OPC, etc?
Yes, a Section 8 company can be converted to any other type of company such as Private limited, Public limited, one-person company, limited liability company, etc. This is further subject to certain rules and regulations.
Can a Trust registered under the Trust Act, be converted to a Section 8 company?
As per the Companies Act, 2013, there is no restriction for the trust and societies to be converted to a Section 8 company. A trust can be converted to a Section 8 Company, subject to certain rules and regulations.
Is there any prescribed criteria with respect to the number of directors in a Section 8 company?
No, in the case of a Section 8 company, there is no criteria mentioned for maximum and minimum number of directors in a Section 8 company.
Whereas the minimum number of directors has to be 3 in the case of a public limited company 2 directors in the case of a Private limited company and a maximum of 15 directors.
How many Board meetings are to be held in a year in the case of a Section 8 company?
A Section 8 company must have at least one board meeting within every six months.
Let’s Wrap Up
In the concluding words, it must be asserted that in this article we have mentioned all the frequently asked questions(FAQs) with respect to Section 8 Companies. This article can help you sort out most of your queries related to Section 8 companies.
In case you are planning to register your own Section 8 company, trust, society, or NGO you can reach our Team at Professional Utilities and we will help you register your Section 8 company seamlessly.
You can also read further on Section 8 companies: