Planning to start a company for a cause? ASection 8 Company Registration is the way to go and here is everything you need to know about it.
The main reason for a company to register itself as a Section 8 Company registration is to promote non-profit objectives. The objective includes trade, commerce, arts, charity, education, religion, environment, protection, social welfare, sports, and research, to name a few. Read on this blog to know about section 8 company incorporation procedure.
What Is a Section 8 Company in India?
A Section 8 company is a non-profit organization that is registered under the Companies Act, 2013 with the primary purpose of promoting objectives such as arts, commerce, education, social welfare, or other income-advancing causes.
You need to remember the following points if you want to register as a Sec 8 Company:
- There needs to be a minimum of two directors
- Additionally, there is no requirement of minimum paid-up capital in the case of a Section 8 Company registration
Profits of a Section 8 Company
- The profits of these companies are used in promoting the objectives that are supported by the company
- Furthermore, they aren’t distributed as dividends to shareholders
Difference Between a Section 8 Company & a Section 25 Company
A Section 8 Company is the same as the Section 25 Company under the old Companies Act, 1956. As per the new Companies Act of 2013, Section 25 has now become Section 8.
Eligibility Criteria to Have a Section 8 Company
If you want to get Section 8 Company Registration in India, then you need to remember the following points and meet the following criteria. Similarly, all the criteria have to be confirmed to the satisfaction of the central government.
- Your company should aim to promote science, commerce, education, art, sports, research, charity, social welfare, environmental protection, or any other similar causes
- Further, your company should invest all the profits or income generated after incorporation to such objectives only
- Your company does not intend to pay any dividends to its members.
Documents Required to Register a Section 8 Company
draft documents for incorporation of section 8 company are:
- Director Identification Number (DIN)
- Digital Signature Certificate (DSC)
- Memorandum of Association
- Article of Association
- Photographs (passport size)
- Proof of identity i.e. Aadhaar Card, passport, voter ID
- Director details
- Address proof
- Bank details
Procedure to Incorporate a Section 8 Company
Below given is the Section 8 Company Registration procedure:
Obtaining a digital signature for directors
A Section 8 Company will be governed by a board of directors, similar to a private limited company. During the process of incorporation, a DSC is obtained for each of the proposed directors. Moreover, the following documents must be submitted:
- PAN card or Aadhar card.
- Drivers license/passport/voter ID/government issued ID.
Further, after submitting these documents, the applicant must complete an OTP and eKYC procedure to obtain a DSC in their name.
Section 8 Company Name Approval
Simultaneous to the digital signature application process, an application for name approval can be initiated for the Section 8 Company registration to the MCA. Likewise, ensure that the company’s name ends with a word such as foundation, forum, association, federation, chambers, council, or an electoral trust.
You can only register your company with an approved name. Further, you will have 30 days to start your incorporation procedure once the name is approved.
Memorandum of Association (MoA) and Articles of Association (AoA)
They are drafted after obtaining the name approval. Further, the Memorandum of Association MOA defines the scope of a company’s activities. An Article of Association is a document that regulates the internal management of the company and is another important document.
Further, MOA of Section 8 Company must be in form INC-13 while there is no format prescribed for AOA for Section 8 Company.
Filing of SPICe 32 Form
After getting the proposed name approval, you can go ahead with filing form SPICe 32. Moreover, along with the filing, you have to file the MOA and AOA.
Moreover, you will also be required to declare that the MOA and the AOA have been drawn up in conformity with the provisions of Section 8 company regsitration and rules made thereunder.
Additionally, other things that you need to submit are:
- Declaration of individuals applying in Form INC-15
- Estimate of the future annual income and expenditure of the company
- Name approval letter
- Consent and declaration of first directors in Form DIR-2
- Self-declaration by first subscribers in Form INC-9
- PAN and Aadhaar of first directors and subscribers
- Proof of registered office
- Utility bills
- NOC of the owner, if the office is leased
Sometimes this paperwork can be overwhelming, and you will need the help of an expert. Moreover, our team at Vakilsearch will take care of the entire process for you and clear all your queries along the way.
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