Section 8 Company is a type of NGO that works for non-profit and charitable purposes. The income and profit earned from the company is used to promote the objectives of the company and not to be distributed as dividends to its shareholders. It is registered under Companies Act, 2013.
Section 8 company is an upgraded form of Society and Trust. It has many benefits over traditional forms of charitable institution registration. Section 8 company is the most popular form of NGO registration in India. It is easy to register, run and manage.
The main purpose of Section 8 company is to promote non-profit objectives such as commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment and other charitable purposes.
Benefits of Section 8 Company
Eligible for grant and donations: The company becomes eligible for various grants offered by the Government of India. Further, Section 8 Companies are also entitled to receive donations from the general public.
Exemption to the donators: Those donating to a Section 8 Company are eligible for tax exemptions under 80G of the Income Tax Act.
Tax Benefits: There are many tax benefits for Section 8 companies in India.
Separate Legal Entity: The identity of the Section 8 Company and its directors are separate which means the entity will continue to survive, even if all the directors of the company become incompetent to carry on the business.
No Minimum Capital: There is no requirement of minimum paid-up capital for the incorporation of Section 8 Company.
Credibility: Section 8 Company creates their own credibility in the market by holding the License issued by the ROC and the various kinds of activity undertaken by them.
Section 8 License: The Registrar of Companies provides License to Section 8 Companies in Form INC-16.
Minimum requirements for Section 8 Company
Minimum 2 directors are required if Section 8 company is incorporated as a private limited company and minimum 3 directors in case of incorporation as a public limited company
At least one director should be the resident of India
Registered office address
The objective of the company should be for charitable or social purpose only
The profit cannot be shared among shareholders
Procedure of Section 8 Company registration
Step 1. Application for Digital Signature Certificate (DSC)
Section 8 Company incorporation is a complete digital process and therefore requirement of Digital Signature Certificate is a mandatory criteria. Directors as well as subscribers to the memorandum of the company need to apply for a DSC from the certified agencies. Obtaining a DSC is a complete online process and it can be done within 24 hours. This process involves 3 simple verifications that are document verification, video verification and phone verification.
Step 2. Application for the Name Availability
Name application for Section 8 Company can be done through SPICe RUN form which is a part of SPICe+ form. While making the name application of the company, industrial activity code as well as object clause of the company has to be defined.
Note: It should be ensured that company name does not resemble the name of any other already registered company and also does not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950). You can easily check the name availability by using our company name search tool to verify the same.
Step 3. Application for Section 8 License
For obtaining the license under Section 8 Company, Form INC-12 is required to be filed with the Registrar of Companies. Prior to issuance of Certificate of Incorporation for Section 8 company, approval letter under Section 8 of Part 1 i.e, License under Section(1) of the Companies Act, 2013 is issued from the Ministry of Corporate Affairs. Once the form is approved by the Central Government, ROC will issue a 6-digit Section 8 license number.
Step 4. Filing of SPICe Form (INC-32)
Post name approval, details with respect to registration of the company has to be drafted in the SPICe+ form. It is a simplified proforma for incorporating a company electronically. The details in the form are as follows:
Structure of the company
Industrial Activity Code and main division
Details of members and subscribers
Address of the company
Particulars for the payment of stamp duty
Attachments for the details mentioned above
Share capital of the company
Application for DIN
Application for PAN and TAN
Declaration by directors and subscribers
Declaration & Certification by professional
Step 5. Filing of e-MoA (INC-33) and e-AoA (INC-34)
SPICe e-MoA and e-AoA are the linked forms which have to be drafted at the time of application for company registration.
Memorandum of Association (MOA) is defined under section 2(56) of the Companies Act 2013. It is the foundation on which the company is built. It defines the constitution, powers and objects of the company.
The Articles of Association (AOA) is defined under section 2(5) of the Companies Act. It details all the rules and regulations relating to the management of the company.
Step 6. Application for PAN and TAN of the company
Post approval of the above mentioned documents from the Ministry of Corporate Affairs; PAN, TAN & Certificate of Incorporation will be issued from the concerned department. Now, the company is required to open a current bank account by using these documents. You can contact us for assistance with your current bank account opening.