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Section 8 Company

Section 8 Company Registration – An Overview
A Section 8 company registration under the Companies Act, 2013 or a Section 25 Company as per the Companies Act,1956 is an organisation registered with an objective of promoting the fine arts, science, literature, or knowledge sharing for a purposeful matter or for charity. Section 8 companies are regulated through the Companies Act, 2013. These are the limited companies established under the Companies Act. The Government grants these companies an exclusive license under Section 8 Companies Act. There are three main conditions for granting the license.
  • The company should be registered for charitable purposes
  • Income and profits should be used towards these objects
  • The company should not pay any dividend to its members.

 

Process of Incorporation

Step 1: Consent of Directors and Members

Get consent of all the subscribers and Director of the company who are willing to incorporate the company. The person who are becoming the Director of the company (if Individual) can become Member of the company.

Step 2: Check the name Availability

The name of a Section 8 Company must end with the words like Foundation, forum, association, federation, chambers, council, electoral trust. Etc. Rule 8 and 8A of The Companies (Incorporation) Rules, 2014 shall be abided while checking the name of the company. You will need professional expertise to check the name as there are several complexities while doing the same.

Step 3: Apply for DSC

The Digital Signature Certificates (DSC) of all the subscribers and Directors of the proposed Company shall be applied and necessary verification should be done by the applicant.

Step 4: Preparation of MOA and AOA

MOA and AOA of Section 8 Company should be prepared in physical copy with MOA having objects such as promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment etc. and shall mention that company will not distribute dividend to its members.

Completion of Documentation:

Documents including INC 14, INC 15, MOA, AOA, estimate of the future annual income and expenditure of the company for next three years, etc. need to be prepared which will be filed with the Registrar of Company.

Step 5: Filing for Forms:

Incorporation Form SPICe PLUS, will be filed with Ministry of Corporate Affairs along with all the attachments.

Step 6: Final Approval:

When Ministry finds that all the documents are correct and complete in all respect, they will issue License in Form INC 16, Certificate of Incorporation, PAN, TAN etc. Ministry will also allot DIN on incorporation if the Directors do not have DIN already.

Step 7: Other Registration

On getting Approval from Ministry, Section 8 company becomes eligible for registrations such as Section 11, 12 and 80 G of Income Tax Act, 1961, Niti Aayog etc.

 

Documents Required for Registration

  • Digital Signatures of all Directors and Subscribers
  • DIN No. for all Directors (If already allotted, otherwise it can be allotted later on)
  • Identity Proofs for all the Directors and Subscribers (PAN Card)
  • Address Proof of all the Directors and Subscribers (e.g. Aadhaar, Bank Statement)
  • Photograph of all the Directors and Subscribers
  • Any Utility Bill as Address Proof of Registered office of the company
  • If Registered Office is Rented, No Objection Certificate/ Rent Deed from the owner of the Property
  • Other documents as prepared by the Professional

 

Benefits of Section 8 Company

  • Incorporated for social welfare
    A Section 8 company is incorporated for charity, social welfare and social promotion. Their main aim is to promote social welfare and work for society instead of earning profits. Their main objects depict the reasons for their incorporation. The objects could include Sports, Promote commerce, art, science, education, research, social welfare, religion, charity, protection of the environment, or any such other object.
  • No minimum capital
    As compared to other companies, section 8 companies don’t require any prescribed minimum paid-up share capital. It can be incorporated with zero authorised/ paid up capital
  • Licensed by government
    These types of companies are licensed by the central government under section 8 of The Companies Act 2013 and these companies work for society and receive a donation from other general public for the welfare work.
  • Limited liability
    Section 8 Company also forms as a private limited or public limited company having limited liability. Members of this company have limited liability as per their share subscribed. Accordingly, their personal assets cannot be used to pay off any debts on which the company has defaulted/
  • No dividend distribution
    According to the Companies Act 2013, A Section 8 company cannot distribute any dividends to its members. The profits can only be used in promoting their business objectives.
  • Stamp duty Relaxation
    Some states such as Punjab, Gujarat, Delhi, West Bengal etc. are giving registration of Section 8 company with Zero Stamp Duty, however there are other states giving relaxation in stamp duty.
  • No suffix
    Section 8 companies may not use suffixes like the private limited company or limited company.
  • Tax Benefits
    Section 8 company is eligible for getting tax benefits. They can get registered under section 80G and 12AA of IT act thereby allowing them to provide tax exemptions to any donors.

 

Characteristics of Section 8 Company

Section 8 Company

  • Preeminent section 8 company registration fees & services
  • More organized operations and greater flexibility
  • No minimum capital requirement
  • Many tax benefits are available
  • Secure, seamless, and high-quality work

Price : ₹5599.00/-

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F.A.Q.

es, a Section 8 Company can generate profits through its activities. However, these profits must be utilized for promoting the company’s objectives and cannot be distributed among the members as dividends.
Yes, a Section 8 Company can pay salaries to its members or employees for their services. However, the salaries should be reasonable and in line with industry standards.
Yes, a Section 8 Company can receive foreign contributions, but it must comply with the regulations specified under the Foreign Contribution (Regulation) Act, 2010. Prior approval from the Ministry of Home Affairs is required for accepting foreign contributions.
A Section 8 Company must have at least two directors and two members. The directors and members can be the same individuals.
The process involves obtaining Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for directors, reserving a unique name, preparing Memorandum of Association (MOA) and Articles of Association (AOA), filing the incorporation application with the Registrar of Companies (RoC), and complying with post-incorporation requirements.
Yes, the name of a Section 8 Company can be changed. The company needs to follow the prescribed procedure and obtain approval from the RoC for the name change.

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