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, also known as a Non-Profit Organization (NGO), is a type of organization formed to promote social welfare, charity, education, religion, and any other non-profitable purpose. 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.
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?
Section 8 The procedure and requirements of the 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 they are different types, such as a Section 8 company cannot use the words “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.
Section 8 Company Registration Eligibility Criteria
This section will give you detailed information about the Section 8 Company Registration Eligibility Criteria.
- Minimum Two People: Two people are required to become a shareholder /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 :
- Social Welfare
- Protection of Environment
- No Profit Distribution: Section 8 A company’s profits should be applied only to the promotion of the goods of the company for which it is made. Members should refuse to pay dividends.
Read also: Top 10 NGOs in India
Benefits of Section 8 Company
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.
Nevertheless, some exemptions and benefits have been provided for NGOs and NPO u/s 8 of the Companies Act 2013. There are many tax exemptions for such companies. Donors contributing to the Section 8 company can claim tax exemption against these donations.
- Tax Exemption: Section 8 companies are eligible for tax exemption under Section 12A and 80G of the Income Tax Act, 1961. This exemption is available to donors as well, 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 own name.
- Perpetual Succession: A Section 8 Company has a perpetual existence, which means it continues to exist even if its members change or if there is a change in the management.
- 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
|Advantages of Section 8 Company||Disadvantages of Section 8 Company|
|Distinct Legal Identity||Use of Profits|
|Zero Stamp Duty||No profit distribution|
|No Minimum Capital Requirement||Remuneration Officer|
|Name and CARO||Zero Benefits|
|Credibility and Membership||Alteration in MOA and AOA|
|Exemption to the donors||Rules and Regulations|
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.
|For Directors / Shareholders||For Registered Office|
|Copy of PAN Card||Ownership Proof (House Tax etc.)|
|Aadhaar Card||Utility Bill (Electricity Bill, Gas Bill)|
|Address Proof (Bank Statement, Electricity Bill, Telephone Bill)||NOC (from the owners – of the premises is rented)|
|2 Passport Sized Photographs|
An essential point of Section 8 Company Registration
The mandatory requirements for starting a Section 8 company are as follows:
- 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.
- 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.
- 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 provisions under the Companies Act, 2013. Maintenance of accounts, audit, return filing, board meeting, 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.
- 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.
- The company has to comply with the provisions of the Income Tax Act.
- If the Section 8 company comes under the purview of the GST Act, it should be registered in the GST.
- It cannot convert itself into any other type of company structure without complying with the conditions.
What are the steps of the Process of NGO Registration?
In this section, you will get detailed information about the steps of the Process of NGO Registration.
- 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
Here, setting up a non-government organization under Section 8 company is to promote 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 works of social welfare 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 the Section 8 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
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 DSC, you can apply to agencies that are government certified and will issue 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 have to present yourself to the registration authority and prove your identity.
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 will have to 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
|Name of the form||Purpose of the Form|
|INC 1||Name Approval|
|INC 7||Application for Incorporation of Company|
|INC 9||An affidavit from each director and subscriber|
|INC 12||Application for License|
|INC 13||Memorandum of Association|
|INC 14||Declaration from a practising Chartered Accountant|
|INC 15||Declaration from each person making the application|
|INC 16||License to incorporate as Section 8 Company|
|INC 22||The situation of the Registered Office|
|DIR 2||Consent of Directors|
|DIR 3||Application to ROC to get DIN|
|DIR 12||Appointment of Directors|
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)
Can a Section 8 company be a small company?
It must be noted that a public company, a subsidiary of another company, a Section 8 company or a company governed under any Special Act will by default not be recognised as a small company regardless of the above criteria.
What is the section 8 company registration?
>The company should be formed for the promotion of a social cause. It may be charity, education, industry, sport, etc.
>Income and profits should be used for this purpose or object only, and no dividend should be paid to its members.
What are the section 8 company registration eligibility criteria?
1. Minimum Two People
2. No Minimum Capital
3. One Resident Director
4. Unique Name
5. Social or Welfare Object
6. No Profit Distribution
What are the advantages of Section 8 Company?
Distinct Legal Identity
Zero Stamp Duty
No Minimum Capital Requirement
Exemption to the donors
What are the disadvantages of Section 8 Company?
Use of Profits
No profit distribution
Alteration in MOA and AOA
Rules and Regulations
|FCRA Registration Procedure||How to Start Society?|
|How to Start an NGO||CSR Registration for NGO|
|12A and 80G Registration for NGO||NGO Darpan Registration Procedure,|
|Trust Registration Procedure||–|