Are you looking to register a Section 8 organization? Here's everything you need to know, from the eligibility requirements to the benefits of doing so. We'll also touch on the registration process and the paperwork you need to start. So if you're considering starting a social welfare company in India, read on for all the information you need to get started.
The company registration process can be pretty daunting if you don’t know what you are doing. Of course, it doesn’t help that there are many requirements and details to remember. In addition, there are numerous terms and phrases you’re expected to understand beforehand. However, it’s essential to know what they mean. It could make or break your application. It depends on how well you understand and incorporate it into your business plan. Also, the documents required when filing your application with the Registrar of Companies (ROC). Continue reading to know more about the procedure for incorporating a section 8 company.
What Is a Section 8 Company?
Section 8 company is a business entity registered under Section 8 of the Companies Act, 2013. This type of company has only one class of shares, and all the shareholders are not required to be members. The minimum number of directors is one director. The maximum number of directors shall not exceed three in case there are no employees and five in case there are employees.
A Section 8 company, as defined by the Companies Act, aims to promote various fields such as arts, commerce, science, research, education, sports, charity, social welfare, religion, environment protection, or other similar objectives.
The minimum number of persons constituting the company at any time shall not exceed two persons. A person or an entity can be appointed as a director on the terms specified in its Articles. A person not qualified for an appointment as a director may be designated an alternate director. An alternate director may exercise all powers conferred on him by law or these Articles. Still, he does not have voting rights, nor does he have liability for any obligations of the company arising from his activities on behalf of such a company except those incurred with his funds or property, which he agrees to take responsibility for.
Procedure Of Incorporation Of Section 8 Company
The new procedure for incorporating Section 8 company has made business registration easy. It is because the process has been simplified and is much faster than before. However, one must still comply with the Indian Companies Act 1956 while incorporating a Section 8 company.
The process should be done in two stages. First, prior registration entails completing a form and submitting documents. These documents can be ID proof, copy of PAN card, proof of address, capital contribution statement, etc. After this, they will process the application within three days.
Once all approvals are obtained, the application will be published in some newspapers as a costlier advertisement for three days. It would then need to wait 20 days, after which it becomes an active Section 8 company. Therefore, you must take the necessary steps during the business registration to avoid difficulties later.
Make sure you know all requirements at every stage, such as minimum investment and requisite qualifications required for Directors and Managers. Lastly, if any changes need to be made to your Section 8 company afterwards, you can make them easily by filing an amendment request.
Eligibility To Apply For A Section 8 Company
- The eligibility criteria to apply for a Section 8 Company in India is a company registered under the Indian Companies Act, 2013.
- The company should have paid up share capital of ₹ 2 lakhs and at least two directors.
- There should be at least one person who holds not less than 51% shareholding in the company.
- The application can only be made on behalf of the company by its directors or members.
- You should note that if more than 50% of directors are related, then all such family members need to approve the registration of Section 8 Company in India before it is completed.
- There must be a promoter, a managing director, and a minimum of two directors.
- Directors must be adults (aged 18 years); if specific requirements are met, three male or female directors shall form the required number to constitute an office.
The Necessary Documents For Section 8 Company
- Business Licence: The Authority of Industry and Trade (AIT) Department.
- Certificate of Incorporation: The Ministry of Commerce and Industry in India.
Note: The certificate should be submitted to the Registrar of Companies within one month from its date.
- Company Seal: The seal should be embossed on all papers and documents about the company’s activities and correspondence from them.
- Memorandum & Articles of Association: These two documents form a contract between members outlining what they will do together and how their shares will be allocated among themselves.
Note: The Memorandum lays down the general objects and objects of the company, while the Articles of Association are concerned with more detailed provisions.
- Copy of PAN card/PAN numbers: Provide proof that you are eligible to set up a private limited company in India. Income Tax returns filed can also serve this purpose.
What Are the Procedures Required for Registration?
Before registering a section 8 organization, you must take the time to understand how the registration process works. First, you will need a few registration documents that are applicable to section 8 companies : Proof of ID, Address, Business Name and DBA form, and Articles of incorporation.
After submitting your application, the officials will contact you by either mail or email. The letter will let you know if the company has been registered or refused. If it was rejected, the letter might have noted a reason. If you’re unsure about any of the reasons listed, contact the Secretary of State’s office before proceeding with registration again. Suppose you are approved for registration. Congratulations! Your new company is now set up and ready to go.
Advantages Of a Section 8 Company
One of the most significant benefits is that you don’t have to pay taxes on your income. It is because profits are distributed among all the members, not just one person. The company’s earnings are then divided by the number of member shares, which creates a tax-free profit for each member.
Another benefit is that you can use your Section 8 Company as an umbrella for other projects and activities, so there is potential for increased revenue streams or passive income. Lastly, it can be beneficial in terms of tax planning.
Conclusion
This is the procedure for incorporating section 8 company. Vakilsearch is a law firm that provides the best services for its clients. They are the most trusted brand in the industry and provide many benefits, including registration of Section 8 Companies. Vakilsearch is noted for its commitment to excellence, focusing on client satisfaction and attention to detail.
The company is committed to delivering prompt, high-quality service that exceeds expectations. They have been providing legal services for over 30 years and have successfully helped many people register their companies. So get in touch or browse through their website today!
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