Private LimitedSection 8 Company

What Are The Benefits Available To Section 8 Company?

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 organisation 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:

  • 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
  • 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
  • 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
  • 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 the sec 8 of 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 practising 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 & DIN3000
  • 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.

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. 

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