In India, the Section 8 Organization is governed by the Indian Companies Act, 2013 and the rules and regulations enacted thereunder. Read this article to learn about the Section 8 Organization documents for registration.

Section 8 Company is a company licensed under the Companies Act, 2013. The main object of this is to promote research, religion, charity, commerce, art, science, sports, education, environmental protection, or any other object, provided that the profits, if any, or other income is used to promote only the objects of the company. Documents Required for Section 8 Company hold a significant role for every business.

Section 8 Company

Section 8 Company is registered for charity or non-profit reasons. This Company, on the other hand, is similar to a Trust or Society; the difference being that a Section 8 Company is registered with the Central Government’s “Ministry of Corporate Affairs (MCA),” whereas Societies and Trusts are registered with the State Government. Compared to Trust or Society, this offers several advantages, including more trust among funders, government agencies, and other stakeholders. Furthermore, a crucial aspect of this Company is that its name can be incorporated without the words “Limited” or “Private Limited”.

Characteristics of Section 8 Company:

A Section 8 Company in India is a non-profit organization formed under the Companies Act, 2013, for promoting social welfare activities. It is incorporated with the objective of promoting art, science, education, charity, religion, or any other useful purpose that benefits society. Some key characteristics of a Section 8 Company include:

1. Non-profit motive: The primary objective of a Section 8 Company is to promote social welfare and not to make profits for its members.
2. No dividend distribution: Any income generated by the company should be utilized for promoting its objectives, and no dividends are paid to the members.
3. Utilization of profits: Profits earned are reinvested into the company’s activities to achieve its objectives.
4. Name suffix: Every Section 8 Company must have the words “Section 8” in its name.
5. Limited liability: The liability of the members is limited to the extent of their contributions to the company.

Advantages of Section 8 Company:

1. Tax benefits: Section 8 Companies are eligible for tax exemptions and benefits under the Income Tax Act, which can help in maximizing the impact of their social welfare activities.
2. Credibility: Being registered as a Section 8 Company enhances the credibility and trustworthiness of the organization among donors, beneficiaries, and stakeholders.
3. Perpetual existence: A Section 8 Company enjoys perpetual succession, which means it continues to exist irrespective of changes in its membership.
4. No minimum capital requirement: There is no mandatory minimum capital requirement for incorporating a Section 8 Company.
5. Easy transfer of ownership: The ownership of a Section 8 Company can be easily transferred or vested in others, facilitating smooth functioning.

Documents Required for Section 8 Company Registration Process:

To register a Section 8 Company in India, the following documents are typically required:

Documents Required for Directors (Indian Nationals):

1. PAN Card
2. Aadhar Card or Passport or Voter ID
3. Address Proof (Bank Statement or Electricity Bill)
4. Passport-sized photograph

Documents Required for Directors (Foreign Nationals):

1. Passport (compulsory)
2. Address Proof from their home country (compulsory)
3. Address Proof in India (if available)
4. Passport-sized photograph

Registered Office Proof:

1. Rental Agreement or Sale Deed of the registered office premises
2. Utility Bills (Electricity/Water/Gas) in the name of the owner

Documents for Shareholders:

1. PAN Card
2. Aadhar Card or Passport or Voter ID
3. Address Proof (Bank Statement or Electricity Bill)

Memorandum and Articles of Association (MOA and AOA):

These documents define the company’s objectives, rules, and regulations for its operations.

Application:

The application for Section 8 Company registration must be submitted along with the required fees.

SPICE 32 Form:

The Simplified Proforma for Incorporating Company Electronically (SPICE) 32 Form is used for company incorporation and DIN (Director Identification Number) allotment.

Section 8 of the Companies Act of 2013: Total Reliefs and Exemption for Companies

• Under Section 8 companies, the directorship is exempt from the most significant number of directorships indicated in Section 165 of the Act
• A general meeting was held by providing notice of 14 days
• Instead of four meetings each year, a Section 8 business would convene at least one meeting every six calendar months
• The recording of minutes of board meetings, general meetings and other resolutions must not be subject to application to the section 8 Organization. However, meeting minutes may be produced within 30 days after the meeting’s result in circumstances where the firm’s articles provide confirmation via the minute distribution procedure
• A section 8 firm would be one of its members
• Section 149(1) of the Act does not apply to Section 8 companies since they are not required to engage an independent director. Because of the reasons stated above, the Audit Committee under Section 8 will not be required to include independent directors in addition to its board members
• Section 8 businesses are exempt from the requirement to appoint a trained CS professional as their company secretary
• Section 8 enterprises are exempt from forming a Remuneration Committee or a Stakeholders Committee.

Directors in a Section 8 corporation

1. Section 149(1): It requires a minimum of three directors for a public limited company and two directors for a private limited company, with a maximum of fifteen directors. However, there is no prescription for a section 8 business.
2. The second proviso to section 149(1) mandates the appointment of a woman director in a specific class of firms.
3. Section 149(3):  All companies must have resident directors.
4. Section 165 of the Companies Act, 2013: It states that directorships in Section 8 companies will not be totaled up when the total number of directorships is computed.
5. Section 149(1) of the Companies Act of 2013: This stated that Section 8 companies are not required to nominate an independent director and are exempt from any subsequent rules relating to independent directors.
6. According to Section 149(3) – Section 8, a corporation must have at least one Resident Director, i.e. a director who has lived in India for at least 182 days or more in the preceding calendar year.

Total Number of board meetings and their quorum

Section 8 corporations must hold at least one meeting half-yearly, and the quorum for board meetings must have eight directors or one-fourth of its entire strength, whichever is smaller. However, the quorum must consist of at least two people.

Section 8 Company Registration Fee

The following are the registration fees for Section 8 company registration:

1. DIN – 3000 & DSC
2. 1000 MoA & AoA & Government Fees & Incorporation Fees – ₹6000-8000* Notary and Stamps – 2000 
3. Professional Fees – ₹8000-10000

Annual compliance with the Firms Act 2013 for Section 8 companies

• A minimum of two board meetings must be held each year.
• Keeping Accounting Records
• Financial Statement Preparation
• An audit is required
• Filing of income tax returns
• Financial statements in form AOC 4 must be filed
• An annual return must be filed every year, along with other e-filing forms such as MGT 7
• Additional registration requirements include 12AA, 80G, and so on.

Conclusion

As a result, Section 8 Companies are created with a charitable motivation and work on the pillars of not generating profits for themselves but instead assisting others in meeting their necessities. Because most of these concerns are not addressed by government policy for various reasons, there is a demand and space for groups ‘that attempt to solve those.’ Thus, the concept of the non-profit organisation emerged.

FAQ:

Read more:

• Section 8 Company Registration Requirements
• Section 8 Company Registration Process
• Procedure for Incorporation of Section 8 Company