Want to run your organisation and legalise its operations across India but don't know how? No worries. Here is a one-stop solution to all your questions like section 8 company registration online and more.
When an organization promotes arts, commerce, education, charity, protection of the environment, sports, science, research, social welfare, or religion, has no business interests, and is registered as a Non-Profit Organisation (NPO) in India, it is known as a Section 8 Company. The earnings and profit of such a company can only be used to promote welfare activities. By no means must any income be used for the benefit of its members or volunteers. Here are some examples of Section 8 Companies in India
Examples of Section 8 Companies in India
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Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industries (CII)
The objective of these companies is to facilitate the growth of trade and commerce in India
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People for the Ethical Treatment of Animals (PETA)
This is an NGO committed to ending the abusive treatment of animals in business and society, protecting and promoting animal interests in everyday decision making and general policies
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Infosys Foundation
This NGO supports the less privileged areas of the society to create opportunities in the areas of education, destitute care, rural development, health care, arts, and culture
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Reliance Foundation
This NPO prides itself on promoting health, education, rural transformation, sports for development, disaster response, urban renewal, and the arts, culture, and heritage.
If you have a solution for any one of India’s pressing problems and aim to achieve your goals via a philanthropic channel, Section 8 is the way to go! The Central Government issues a license to one person or a group of people who propose to be registered under sec 8 of the companies act 2013. The Registrar of Companies (ROC) registers the individual or the group as a limited company without the words “Private Limited” or “Public Limited” added to its name. As a registrant under Section 8, your company is legally entitled to operate anywhere across the nation.
Required Documentation
To complete your company’s registration as a Section-8 Company, the following forms must be filed and processed necessarily in this order.
- DIR 2: Form for the consent of promoters and directors
- DIR 3: Application to get Direct Identification Number (DIN)
- INC 12: Application for license
- INC 16: License to register as a Sec 8 Company (after INC 12 has been processed)
- SPICE: Application for incorporation of a company
- INC 13: Memorandum of Association (MOA) signed duly by all subscribers
- INC 14: Declaration from a practicing chartered accountant
- INC 15: Declaration from each person making the application
- INC 22: Situation of registered office
- DIR 12: Appointment of Directors.
Certain forms need additional documentation to be attached. Please ensure you have the following ready:
- Digital Signature Certificate (DSC) of the proposed directors of the company
- Articles of Association (AOA) signed duly by all subscribers
- Declaration from each subscriber and first director of not having charges of misconduct or offence against them
- Correspondence address till the registered office is official
- Passport Size Photographs of all directors and shareholders
- Members’ Id Proofs such as Aadhar Card, Passport, Voter Id, PAN card
- List and details of proposed promoters and director(s) of the company
- Address Proofs of all subscribers to MOA and first directors of the company such as telephone or gas bills
- Director Identification Number (DIN)
- Copy of the rental agreement if the registered company is on a rented property
- Estimated statement of income and expenditure for the next three years.
Registration Process Made Easy
- The first step towards forming your company is to appoint its directors. If you are registering as a private limited company, a minimum of 2 directors are required. In case of a public limited registration, a minimum of 3 are required. Ensure your MOA and AOA state the purpose and non-profit motives of the company, and the subscribed parties are fully aware of the same. Further, under the Company Act, 2013, you are legally bound to maintain account books, file returns with the ROC and comply with the Income Tax Act and GST Law
- The next step is to obtain the DSC. Since all the forms are filed online, digital signatures of all stakeholders are mandatory. For this, you must obtain a Class 3 DSC from a government recognised certifying agency. Also, attach the address and ID proofs of all directors and stakeholders
- File Form DIR-3 with ROC to obtain a DIN on the Ministry of Corporate Affairs (MCA) portal
- After the DIN is allotted to the proposed directors, file Form INC 12 with the ROC to apply for the Section 8 Company license. Attach Forms INC 13, AOA, INC 15, statement of income and expenditure for next 3 years and list of directors with it
- Once the license is issued, file the SPICE form along with the rest of the additional documents mentioned above
- After successful completion of the procedure, the ROC then issues a Certificate of Incorporation along with a unique Company Identification Number (CIN).
Fee for Section 8 Company Registration in India
A certain price needs to be paid before your company is established as a Section 8 Company. Please keep in mind the below costs:
- DSC Signature & DIN – ₹3000
- Company Name Reservation – ₹1000
- MoA & AoA & Government Fees & Incorporation fees of ₹6000-8000*
- Notary and Stamps – ₹2000
- Professional Fees of ₹8000-10000
Benefits of Section 8 Registration
- The company requires no minimum capital to run! The capital structure can be changed at any time as per the company’s growth requirements. Funds in the form of donations and subscriptions can be collected later from members and the public
- You need not pay any stamp duty imposed on the MOA and AOA of a private or public limited company
- Your company enjoys tax benefits under 80G of the Income Tax Act, 1961. What’s more? The Company Auditor’s Report Order does not apply here
- Those donating to a Section 8 Company are also eligible for tax exemptions u/s 12A and 80G of the Income Tax Act
- A registered partnership firm can also become a member in its individual capacity and obtain directorship.
How to Form a Section 8 Company
To form a Section 8 company, which is a non-profit organization (NPO) that promotes social welfare and other charitable objectives, you need to follow these steps:
Choose a name: Select a unique name for your Section 8 company that reflects its purpose and objectives.
Draft the Memorandum of Association (MOA): The MOA is a legal document that outlines the company’s objectives, activities, and rules. It should include details such as the company’s name, registered office address, objectives, and the fact that it is a Section 8 company.
Draft the Articles of Association (AOA): The AOA contains the rules and regulations for the internal management of the company. It should cover aspects such as the appointment and removal of directors, meetings, voting rights, and other operational procedures.
Obtain Digital Signature Certificate (DSC): The DSC is required for online filing of documents with the Ministry of Corporate Affairs (MCA). It ensures the authenticity of the documents.
Apply for Director Identification Number (DIN): The DIN is a unique identification number
required for individuals who wish to become directors of a company. Each director must obtain a DIN.
File for company registration: Submit the necessary documents, including the MOA, AOA, and other required forms, to the Registrar of Companies (ROC) along with the prescribed fees. The ROC will review the documents and, if satisfied, issue a Certificate of Incorporation.
Apply for PAN and TAN: After receiving the Certificate of Incorporation, apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
Features of a Section 8 Company
The key features of a Section 8 company are:
Non-profit motive: The primary objective of a Section 8 company is to promote social welfare and not for profit-making purposes.
Tax benefits: Section 8 companies are eligible for tax exemptions under the Income Tax Act, of 1961.
Annual compliance benefits: Section 8 companies have fewer compliance requirements compared to other types of companies.
Annual return filing: Section 8 companies are required to file annual returns with the Registrar of Companies.
Dissolution: Section 8 companies can be dissolved voluntarily or by the order of the Registrar of Companies.
Advantages of a Section 8 Company:
Tax benefits: Section 8 companies are exempt from paying income tax under Section 80G and Section 12A.
Limited liability: Members of a Section 8 company have limited liability, meaning their personal assets are protected in case of any liabilities or debts incurred by the company.
Perpetual succession: A Section 8 company has perpetual succession, meaning it continues to exist even if its members change.
Access to grants and funding: Section 8 companies are eligible to receive grants and funding from various government and non-government organizations for their charitable activities.
Disadvantages of a Section 8 Company:
Restrictions on profit distribution: Section 8 companies cannot distribute profits among their members. Instead, the profits must be utilized for promoting the company’s objectives.
Stringent regulations: Section 8 companies are subject to various legal implications and regulations, which can be complex and require compliance.
Government approval for amendments: Any amendments to the Memorandum of Association of a Section 8 company require prior approval from the government.
Conclusion
The Section 8 Company objective is to support non-profit activities that eradicate poverty, promote education in science and arts, develop sports, healthcare, agriculture, and trade and protect the environment. Registration of a Section 8 company is fairly easy, provided your company objectives, the execution plan for the next three years, and proposed income and expenditure for the next three years convincing the ROC.
FAQs
What is an example of a Section 8 company?
An example of a Section 8 company is the Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industries (CII)
Which companies are known as Section 8 companies?
Companies known as Section 8 companies are registered as Non-Profit Organizations or Non-Governmental Organizations with the motive of promoting art, culture, technology, science, commerce, education, charity, etc., and intend to use their profits for welfare purposes only
What are Section 8 companies of the government of India?
Section 8 companies in the government of India are organizations that are registered under Section 8 of the Companies Act, 2013, and have objectives related to promoting arts, commerce, science, research, education, sports, etc.
What are the examples of Section 8 of the Companies Act, 2013?
An example of a Section 8 company is the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industries (CII).
What is the difference between Pvt Ltd and Section 8 company?
The difference between a Pvt Ltd (Private Limited) company and a Section 8 company is that a Pvt Ltd company is a for-profit entity, while a Section 8 company is a non-profit organization that aims to promote social welfare and cannot use terms like Pvt Ltd, Ltd, or Public Ltd in its name
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