Section 8 Company Registration: How to Register, Documents, Application Process, Eligibility, Benefits etc.

Section 8 Company Registration: Before getting complete information about “Section 8 Company Registration“, you should know about society. Under which act should the Section 8 company be registered? A Section 8 Company, a Non-Profit Organization (NGO), is formed to promote social welfare, charity, education, religion, and other non-profitable purposes. It is a company that does not distribute its profits to its members or shareholders but instead reinvests the profits in the business for the betterment of society. Section 8 companies are governed by the Companies Act 2013 and are registered under Section 8 of the Act.

What are Section 8 Company Registration Acts?

Any NGO can get an NGO Registration in India under any of the following acts by law:-

• Trust registration under the Indian Trust Act 1882.
• Society under society’s registration act 1860.
• Section 8 of the company’s act of 2013.

What is Section 8 Company Registration for NGOs?

The procedure and requirements of Section 8 company are set out for a limited company. Including all the rights and obligations that come with such a limited company. This is the only aspect where there are different types, such as a Section 8 company not being able to use “Section 8” or “Limited” in its name.

• The procedure for registering a Section 8 company to include an NGO, trust or cooperative society under the Companies Act 2013 is similar.
• There is an additional requirement for obtaining a license from the Central Government under Section 8 of the Companies Act 2013.
• Essentially, the license allows them to remove Private / Public Limited from their name. With this license, the company becomes eligible for some exemption from the provisions of the law and takes a concession in fees.
• If the proposed Section 8 company is registered as a private limited, 2 promoters are required. But if it is a public limited section 8 company, there should be a minimum of 7 promoters.

Eligibility Criteria

This section will give detailed information about the Section 8 Company Registration Eligibility Criteria.

• Minimum Two People: Two people are required to become shareholders/directors of the company. However, the number of shareholders may not exceed 200.
• No Minimum Capital: There is no minimum capital set; it is based on business requirements. The registration fee is based on the amount of capital.
• One Resident Director: At least one director must be an Indian.
• Unique Name: Section 8 The company name must be unique and not identical to any existing company name or trademark.
• Social or Welfare Object: Section 8 The company aims to promote the protection of :

1. Commerce
2. Science
3. Sports
4. Research
5. Education
6. Social Welfare
7. Religion
8. Charity
9. Protection of Environment

• No Profit Distribution: Section 8 A company’s profits should be applied only to promoting the company’s goods for which it is made. Members should refuse to pay dividends.

Read also: Top 10 NGOs in India

Benefits of Section 8 Company for NGO

Being an NGO or a Non-Profit Organization does not mean that the company cannot profit or income. Cannot distribute profit among promoters. All proceeds must be applied to promote the commodity. The company can earn income, but the promoters do not benefit.

• Tax Exemption: Section 8 companies are eligible for tax exemption under Section 12A and 80G of the Income Tax Act, 1961. This exemption is also available to donors, who can claim tax deductions for donations made to the company.
• Separate Legal Entity: A Section 8 Company is a separate legal entity from its members, which means the company can own property, sue and be sued in its name.
• Perpetual Succession: A Section 8 Company has a perpetual existence, which means it continues to exist even if its members change or there is a management change.
• Limited Liability: The liability of the members is limited to the amount of their share capital in the company.
• Credibility: A Section 8 Company enjoys greater credibility and trust among the public and potential donors because of its non-profit nature.

Read also: How to start an NGO?

Advantages and Disadvantages of Section 8 Company

Documents Required :-

In this section, you will get detailed information about the Section 8 Company Registration document required for directors/shareholders and the registered office from the table below.

Essentials for Section 8 Company Registration

The mandatory requirements for starting a Section 8 company are as follows:

Minimum Requirement

• MCA incorporates a Section 8 company.
• All requirements of the Companies Act 2013, such as the minimum number of directors and shareholders, must be met.

Charitable Objects

• Section 8 companies may be established for non-profit purposes only. Any profit or income this company earns will not be distributed among its members.
• This implies that income will either be re-established in business or used to advance the main items, charitable purposes.

Management Team

• Unlike other trusts governed by a trustee according to a trust deed, the operations of Section 8 companies are managed by the board of directors according to their MOA and AOA.

Companies Act, 2013

• Section 8 companies should comply with the Companies Act, 2013 provisions. Maintenance of accounts, audit, return filing, board meetings, etc.

MoA & AoA

• Section 8 The company shall not make any changes in its MOA and AOA provisions without obtaining approval from the Central Government.

Voting Rights

• Section 8 The voting rights of shareholders of a company are based on the number of shares held, which is the same as any other company.

Income tax

• The company has to comply with the provisions of the Income Tax Act.

GST Registration

• If the Section 8 company comes under the purview of the GST Act, it should be registered in the GST.

Conversion

• Without complying with the conditions, it cannot convert itself into any other company structure.

What are the steps of the NGO registration process?

In this section, you will get detailed information about the steps of the NGO registration process.

• Find a purpose to start an NGO.
• Prepare the prerequisites for the Registration process under section 8 of the Companies Act of 2013.
• Use the forms required for NGO Registration.
• Issue a Certificate of Incorporation.

Purpose of NGO – Section 8 Company for NGO

Here, setting up a non-government organization under Section 8 company promotes their non-profit goals, such as trade, commerce, arts, charity, education, religion, environmental protection, social welfare, sports, research, etc.

The profits or income received through these social welfare works in the company’s establishment will also be applied to promote the company’s objectives. These generated profits are not intended to be shared as dividends among the company’s members established as an NGO.

You must have at least two directors to get an NGO registration online in India. It is a requirement under Section 8 of the Companies Act of 2013 to incorporate a company as a private limited. If it is included as a public limited company, members will have no limit to apply. On top of this, there is also no minimum requirement of paid-up capital, such as when obtaining an NGO registration under Section 8 of the Companies Act of 2013. Now, let us see the prerequisites for the registration process of an NGO.

Pre-Requisites to the NGO Registration

DSC

Start getting a digital signature, or DSC for short. This is required when filling out the online form. Most online registration forms are signed with a digital signature. To get a DSC, you can apply to agencies that are government-certified and will issue a DSC for you. You will get a digital signature certificate. The process of obtaining a DSC is variable with agencies. For this purpose, you can get a digital signature for class 2 or class 3. These categories are some categories of digital signatures. The difference is that a person’s class 2 digital signatures are verified against their already verified data. In the class 3 category, you must present yourself to the registration authority and prove your identity.

DIN

Next, apply for DIN. DIN is an abbreviation for Director’s Identification Number. You have to use it for the alleged directors of your company. Allotment of applications for DIN should be done through DIR-3. You must attach your PAN card number, proof of identity, self-attested copies of the required documents, and proof of your residential address. Otherwise, these forms can be verified by a Chartered Accountant or Company Secretary. All are presented collectively to the MCA or Ministry of Corporate Affairs through the MCA portal. NGOs are the forms used for registration once submitted.

Number of Forms Required for Registration

Section 8 Procedure for the incorporation of a company

Step 1: Section 8 Obtain the DSC of the proposed directors of the company, after receiving the DSC, file Form DIR-3 with the ROC to obtain the DIN.

Step 2: After the DIR-3 is approved, the ROC will allocate a DIN to the proposed directors.

Step 3: File Form INC-1 with the ROC to apply for the company name. A total of 6 names can be used in order of preference, one of which will be allocated based on availability.

Step 4: After approval, file INC-12 with the ROC to apply for a license for a Section 8 company.

Documents to be attached with INC-12:

• Draft MOA as per Form INC-13
• Draft AOA
• Declaration as per INC-14 (Practice Declaration from Chartered Accountant)
• Declaration as per Form INC-15 (Declaration from everyone applying)
• Estimated Income and Expenditure for the next 3 years.

Step 5: After the form is approved, a license will be issued under section 8 in Form INC-16.
Step 6: After obtaining the license, file SPICE Form 32 with the ROC for incorporation with the following attachments:

• An Affidavit From All Directors’ Co-Clients – INC-9
• Declaration of Deposit
• KYC of all directors
• Send DIR-2 along with your attachments, i.e. PAN card and address proof of the directors.
• Consent letter of all directors
• Directors are interested in other institutions
• Utility bill as proof of office address
• If the premises are leased/leased, then the N.O.C.
• Draft MOA and AOA

If the ROC is satisfied with the forms submitted, it issues a Certificate of Incorporation with a unique company identification number (CIN).

Frequently Asked Questions (FAQs)

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