A non-profit firm from India must register under FCRA to get funds from a company or individual overseas. Such a company works to promote charity, art, science, commerce, religion, etc.
Can A Foreign Company Be Registered As A Section 8 Company In India?
Many nations want to invest in our country. Our country India is a centre for business. The reason for this is the low production cost and great inland demands.
A company is called a Sec 8 company while it is registered as an NPO. An NPO is when a company aims to encourage education, charity, arts, science, sports, social welfare, commerce, and protection of the environment and wants to utilise its profits or any other earnings to encourage these purposes.
NPO profits or earnings can’t be utilised to pay surpluses to the company’s associates and must be for charitable purposes. Such businesses or companies get an integration certification from the centre and are responsible for following the regulations stated by the government.
As per the regulation, in the case of failure to abide by the duties specified by the centre might result in the establishment set up on the government orders. Apart from this, stringent litigation can be taken against every company associate. This is when the purposes declared by the company are confirmed to be fake.
What Is A Foreign Company?
A foreign company is referred to as a company that is incorporated outside India and possesses a business site in India either through an agent or itself in a physical or digital manner.
Traits of a Sec 8 Company
A sec 8 company possesses the below-mentioned traits that other companies lack:
1. Constrained responsibility
The associates of a sec 8 company possess constrained responsibility.
2. Privileges
As a sec 8 company has non-profit purposes, the Company Act has granted them plenty of privileges and exceptions under Sec 12AA and 80G of the Income Tax Act 1961.
3. Charitable purposes
The prime purpose of a sec 8 company is to endorse various areas. These can be arts, sports, religion, social welfare, charity, research, protection of the environment, and many more.
4. No minimum share capital is required
Unlike other companies, a section 8 company doesn’t require the minimum share capital.
What Are Different Modes Of Performing Business In India?
1. Joint venture
A joint venture JV is when foreign companies want to choose a native partner for the JV. MOU or Letter of Intent is meant to be signed. This is generally called a JV agreement.
2. Wholly Owned Subsidiary
This is where foreign companies must make 100 per cent FDIs investment mandatory within the local company via the automatic course of the Reserve Bank of India.
3. Subsidiary Company
This is where foreign companies have at least 50.01 per cent stakes in the local company.
4. As a foreign company
This is when a foreign company is needed to register under Company Act for commencing the business site within the country in various ways. These include Liaison Office, Branch Office, and Project Office.
What Is The Role Of RBI In The Establishment Of A Foreign Company?
RBI or Reserve Bank of India authorises the foreign internal transmittals for the FDIs in compliance with rules as issued by the RBI under Foreign Exchange Management Act.
Who Is Eligible To Be Registered As For Section 8 Company?
A group of persons or a single person can apply for section 8 company if they have the following motives or aims. All the below-mentioned motives must be set to the central government’s satisfaction.
- When the establishment intends to endorse commerce, art, sports, religion, research, social welfare, charity, etc.
- When the establishment intends to put money either from its profits or any other earnings for endorsing such objectives.
- When the establishment doesn’t want to pay any bonuses or extras to its associates.
Section 8 Companies Incorporation Process
The 2013 Company Act contends with the Sec 8 companies Incorporation process. According to this section, an application within Form no. INC.12 needs to be issued with the following documents to the MCA (Ministry of Corporate Affairs).
- Form no. INC 14
- Form no. INC 19
- Form no. INC 13
- Form no. INC 15
- Form no. INC 9
What are The Documents Needed to Get Registered as a Sec 8 Company?
- Articles of association
- Digital Signature Certificate
- Address proof
- Passport-style pictures
- Director ID number
- Identity proofs of associates, like Voter ID, Aadhar, passport, etc.
- Memo of Association
How Many Directors Can Be in a Sec 8 Company?
As per Sec 149(1) of the Company Act, there can be three directors for public limited companies. For private limited companies, there can be only two directors. There is no maximum or minimum prescription for sec 8 companies.
A female director is approved in a certain class of companies, per the second proviso to Sec 149 (1).
In Sec 165 of the Company Act, Director’s post in a sec 8 company will not be reviewed while the total directors will be considered. It will not count when following abiding by the max limit of 20 director’s posts approved in the Company Act.
In Section 149 (3), a sec 8 company should possess a max of one resident direct. He is a director who has lived in India for a minimum of 182 days or more in the prior calendar year.
Conclusion
Can a foreign company be registered as a section 8 company in India? The short answer to this question is yes. Any individual or group from overseas can be a director of a sec 8 company in India if they have a valid Director ID number. From the BODs, at least one director should be a citizen of India. A private limited sec 8 company can possess 200 associates, while in a public limited sec 8 company, there are no maximum or minimum associates. A foreign company can have an office in India to do business within the country. To open a branch office, liaison office, or project office, the company must obtain authorization from the government or RBI, and they must also comply with FCRA regulations if applicable.
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