Company IncorporationSection 8 Company

Who Can Form a Section 8 Company? 

It is crucial to register a section 8 company. This will help to provide tax exemptions. Forming a section 8 company is a complex process. Learn who can form a section 8 company and how to register a section 8 company directly from the experts. 

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An individual or an organization can make a petition to the Registrar of Companies (ROC) using requisite aspects to form a firm under Section 8 of the Companies Act. Now, let’s see who can form a Section 8 company.

What Is a Section 8 Company? 

The Companies Act distinguishes a Section 8 company as one whose motive is to improve fields of arts, commerce, science, research, education, sports, charity, social welfare, religion, environment safety, or other similar purposes. These corporations also use their revenues for achieving their goal and do not pay any income to their partners.

These corporations were recently defined under Section 25 of the Companies Act, 1956 with more or less the same requirements. The new Act has, however, specified more purposes that Section 8 companies can have. The representations of Section 8 companies include the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Confederation of Indian Industries (CII). The goal of these firms is to enable the development of exchange and commerce.

Eligibility Criteria for Section 8 Company

Minimum 2 People: 2 people are compulsory to hold the post of a shareholder/ director of the company. However, the number of shareholders may not go beyond 200

No Minimum Capital: There is no minimum capital requirement set, it is founded on business regulations. The registration payment is based on the percentage of capital.

One Resident Director: At least one of the directors must be a citizen of India and should reside in India.

Unique Name: Section 8 company name must be different and not similar to any other company or trademark.

Social or Welfare Object: Section 8 company firm should focus on the betterment of the following fields 

  • Marketing
  • Science
  • Art
  • Research
  • Education
  • Social Welfare
  • Religion
  • Charity
  • Protection of Environment

No Profit Distribution: Section 8 companies’ revenues should be used only for the objective on which it is formed. Other members of the company should not use the money for personal purposes.

APPLY FOR SECTION 8 COMPANY

Documents Required for Section 8 Company Registration

  • Passport size photos of the company members
  • ID proof of all partners of the company
  • List of directors and supporters
  • Address proof of all managers and supporters
  • Rent agreement (If rented premises) 
  • No objection certificate (NOC) from the landlord.
  • Electricity bill or water bill with residence articles (if self-owned property).

Steps to Register Section 8 Company in India

Registering the Section 8 company can provide major tax benefits under Sections 12A and 80G of the Income Tax Act. The basic criteria of Section 8 company are that it is established for the non-profit intention and it prohibits the expenditure of separation. The revenue, if any, of Section 8 Company must be utilised for the objective for which Section 8 Company is established. Steps to register a section 8 company in India are discussed below:

  1. A petition for name availability has to be filed in the Reserve Unique Name (RUN) application for altering its existing name. 
  • The name of Section 8 Company shall comprise the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust, and the like, etc. 
  • One can recommend a maximum of 2 names at a time and 1 resubmission is enabled in the RUN facility.
  • Payments for RUN are ₹1000. It is advisable to connect the object section of the proposed corporation.
  •  Once the name is authorized it is useful for 20 days.
  • Within this given time the RD 1 license has to be applied. The RD won license is valid for 30 days.
  1. Getting the digital signatures of the first company directors is the second step. A grade 3  digital signature of initial subscribers and managers which are expected for documenting company incorporation aspects with the ROC.
  2. Documents like memorandum of association (MOA), and articles of association(AOA) should be drafted for the firm. MOA of Section 8 Company must be in form INC-13 while there is no configuration prescribed for AOA for Section 8 Company. MOA & AOA of the company shall be approved by each of the directors who shall refer to his name, address, definition, and employment in the existence of at least one bystander who shall witness the signature and shall also sign and add his name, address, description, and occupation.
  3. After receiving the permission, one may go along with the filing of application SPICe. This should be filed within the validity period of both the name and RD 1 license. This is the final stage of incorporating the Section 8 company.

Cancellation of License

Section 8 companies expect a commission of a license by the central government. All such licenses are revocable based on the following grounds

  • The company’s contrived requirements of Section 8 terms of the license are disobeyed
  • When its conduct is dishonest, or it fails to meet its own goals and public policy.

The government can just order the firm to be wound up or amalgamated with another related corporation under certain situations. The Government has to cross verify with the corporation before passing the order. 

How Vakilsearch Can Help in Registering Your Section 8 Company

As you can see, the procedure of registering a Section 8 company is time-bound. You have to complete the process within 20 working days. This is exactly what Vakilsearch does. Vakilsearch’s experts can help you to register section 8 companies online. This can avoid meticulous registration processes and physical presence. 

Reach out to experts at Vakilsearch for registering a Section 8 company. Our experts will help you choose the right entity section and complete the online paperwork. We will help you to register the NGO and handle all the formalities easily.

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