In this informative article, we have listed the Section 8 Company Incorporation Eligibility for you clearly and concisely. Continue reading to learn more about it.
In India, an NGO (non-profit organisation) may be registered as a company as per Section 8 of the Companies Act of 2013, as well as a society or a trust. The most common type of NGO in India is the Section 8 Company structure. Compared to a Society or Trust, it’s easier to register, maintain, or handle a Section 8 Company. According to Section 8 Company of the Companies Act of 2013, a Section 8 Company refers to one that seeks to incentivise sports, art, education, social welfare, sciences, charity, environmental preservation, or other comparable goals. The ultimate reason for forming a Section 8 Company is to encourage non-profit purposes like trade, business, arts, sports research, environmental protection, charity, social welfare, and so on. A minimum of two directors are needed in order to register a Section 8 organisation. Furthermore, there’s no requirement to secure minimum paid-up capital in order to establish such a corporation. This informative post will inform you about the minimal prerequisites and eligibility requirements for the creation of a Section 8 Company. Continue reading to learn more.
Section 8 Company: Key Points
- An NGO in India may be registered with the Registrar of Societies or as a Non-Profit organisation as per Section 8 of the Company Act of 2013.
- The profits made by Section 8 Companies can’t be used for anything other than charitable reasons. Furthermore, such profits cannot be distributed to stockholders.
- A Section 8 Company is analogous to a Section 25 Company as per the previous Company Act of 1956. Section 15 companies are now recognised as Section 8 under the current Company Act.
- A Section 8 organisation must follow the regulations of the 2013 Companies Act. As a result, these organisations are required to manage the account books and file returns with the Registrar of Companies.
- Without the government’s agreement, such firms have no authority to change their charter papers, such as the MOA and AOA. They’re also needed to follow the IT Act and GST laws.
Potential Advantages of Establishing a Section 8 Company in India
The following are some of the primary advantages of establishing a Section 8 Company in India:
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Exemption from Tax
Section 8 Company incorporated under Section 12AA of the IT Act is eligible for a tax exemption and f 100 percent. Profits earned by such businesses are not taxed since they are used for charitable reasons.
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There Is No Minimum Capital Required
Unlike other organisations like the public company limited, Section 8 organisations have no underlying limitations regarding minimum capital requirements. However, these organisations have the power to adjust their capital structure as the firm grows.
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There Is No Need to Pay Stamp Duty
Unlike other companies like private limited companies pr public limited companies, a Section 8 Company isn’t required to pay a stamp when it comes to registration.
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Separate Legal Entity (Discrete)
A Section 8 Company, like any other registered company, has its legal identity and enjoys independent legal standing from its members. These beings are consistent with the idea of eternal existence.
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Increased Credibility
In terms of legal standing and compliance, a Section 8 Company is more trustworthy. Such entities often operate inside a strict legal structure devised by the relevant authorities. Unlike non-profit organisations and trusts, these entities adhere to severe compliance requirements after registration.
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There Is No Title Requirement
Section 8 Companies do have the ability to select the name of their choice throughout the registration procedure. Unlike other registered frameworks, they aren’t required to use terms such as “Section 8” following their name.
Section 8 Company Incorporation Eligibility
Listed below are the eligibility criteria for Section 8 Company:
- A minimum of two stockholders are required
- At least two directors are required (Stockholders and Directors might be the same individual)
- At least one Director must be an Indian resident
- There’s no minimum capital required
- The Income Tax PAN Card is obligatory for Indian citizens
- Any of these forms of identification are needed: Aadhar Card, Passport, Voter Card, Driving License. When it comes to foreign nationals, however, a passport is required as evidence of identification
- Any of these residential proofs are required: bank statement, electricity bill, mobile bill, or telephone bill
- Proof of the Registered Office (i.e. the agreement of rent together with the current rent receipt as well as a photocopy of the current utility bill in the landlord’s name. Also, a NOC from the premises’ owner, when it comes to rented premises)
- If the premises are possessed by either the Promoters or the Directors, any documentation confirming ownership, like House Tax/Sale Deed receipt, must be submitted together with the NOC.
Section 8 Company in India: Legal Requirements for Forming
The following are the required needs that must be met before you apply for a Section 8 Company Incorporation:
- Number of Directors: Suppose the Section 8 Company wishes to operate as a Pvt. Ltd. Company; in that case, it must have at least two directors. Similarly, if such a Section 8 organisation intends to function as a public limited company, at least three directors are necessary.
- Number of Members: If the business wishes to operate as a Pvt. Ltd. Company, the MCA has limited the total number of members that may be a part of a Section 8 Company to 200. Section 8 organisations with a business framework, such as a public limited company, are not subject to this restriction.
- Company Name and Capital Requirement: According to the 2013 Company Act, maintaining a minimum paid up capital for section 8 company. Non-profit organisations that operate under Section 8 aren’t required to use terms such as “Pvt. Ltd.” in their names.
- Company Objects: Section 8 Company registration is only available to organisations with non-profit goals. The AOA and MOA should include the goals for which they were created. Any gain made by the Section 8 Company is utilised to further its underlying aims, such as charity giving, or is reinvested in the firm. Such entities’ profits aren’t available or accessible to their members in any way.
Section 8 Company Incorporation Procedure: Documents Required
Listed below are the documents required for Section 8 Company Incorporation:
- MOA (Memorandum of Association) and AOA (Articles of Association)
- Office address proof
- Declaration of the first subscriber (s) and director(s) (no requirement of Affidavit)
- Photocopy of utility bills like electricity, gas, or water
- A resolution conveyed by the promoter firm
- Subscribers and nominees must provide proof of f residency and identification
- Identity and residence verification for the applicant
- Unregistered Company declaration
For AGILE-PRO:
- Evidence associated with the principal business place
- Appointment evidence connected to the Authorised Signatory for GSTIN
- Resolution copy or Authorisation letter passed by BOD
- Acceptance letter as well as Managing Committee
- Authorized Signatory for opening a bank account in a specified bank
- Authorized Signatory Specimen Signature for EPFO
Conclusion
A Section 8 Company in India is regulated by the 2013 Companies Act (and its amendments) as well as the rules and regulations enacted thereunder, and it’s controlled by the Ministry of Corporate Affairs, Govt. of India, via the Registrar of Companies’ offices in each state. The regulations, requirements, methods, and processes for incorporating a business differ based on the sort of firm that’s to be established.
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