NGOs or Sec 8 companies work for charitable objectives. A sec 8 NGO is regulated by MCA, while an NGO listed as Society or Trust is regulated by the state registrar under the state.
The Procedure For Registration Of Section 8 Company In India: The Indian Companies Act of 2013 and its regulations govern the operations of Section 8 Company, which is overseen by the Ministry of Corporate Affairs, Government of India through state Registrar of Companies offices. The Company’s incorporation rules, requirements, processes, and procedures vary depending on the type of company being established.
There are three legal forms for non-government or non-profit organisations in the country. These are Societies, Trusts and Sec 8 companies.
There are no rules on Indian Trusts. On the other side, societies possess various legitimate and institutional frameworks from one state to another.
Sec 8 companies or establishments in India possess a single uniform law as specified in the Company Act. The Company Act of 2013 controls the making, liability, and managing of a sec 8 company; hence, it is more thoroughly controlled and watched compared to Indian societies and trusts and is globally recognised.
A sec 8 company intends to endorse art, sports, research, religion, science, education, charity, environmental protection, and other related fields. Such a company also intends to use its earnings or revenues to endorse its objects.
The key aspect of such a company is that it is made for non-profit purposes and prohibits surplus payment. This signifies that a sec 8 company’s profits or income should be utilised for the purpose for which it is made.
What Are The Perks Of A Section 8 Company Registration?
Following are the perks of having a non-profit/sec 8 company registered:
- No stamp duty
A sec 8 company does not need to have a stamp duty enforced. Such a company does not have to pay for the stamp duty enforced on the MOA or AOA of a public/private limited company.
- There is no minimum capital required
There is nothing like minimum capital for a sec 8 company in India. A section 8 company’s capital structure can be changed at whatever time according to the progress requirements of the firm. So, the finances needed to perform the business processes can be fetched afterwards with donations and subscriptions from associates and common people.
- Individual legal identity
A sec 8 company registration obtains a separate legal identity through its associates. A listed partnership firm company can too be an associate within its ability and get a management post of sec 8 firm.
A section 8 company has an everlasting presence, so the entrance or departure of any associate will not impact its processes.
- Constrained responsibility
Sec 8 company’s associates have constrained responsibility according to their stake subscribed. They aren’t personally responsible for business losses.
- Trustworthiness
A registered sec 8 company is more trustworthy and credible than other companies or firms. The provisions of the Act control such an organisation. Therefore, they must have obligatory checks yearly, and the MOA can’t be changed concerning the non-profit purposes of the organisation.
Documents Needed For Sec 8 Company Incorporation
- AOA (Article of Association)
- MOA (Memorandum of Association)
- Declaration in Form INC-15
- Declaration in Form INC-14
- An assessment of the future yearly income and expenses for the next three years.
- PAN card of first directors
- Aadhar card of first directors
- Letter of Approval from CRC
- Registered office proof
- NOC of possessor whether the registered office is taken on lease or rent.
- Electricity bills of the office for the last couple of months
Incorporation Requirement for a Sec 8 Company
- Charitable objects
The firms recognised as sec 8 companies have non-profit intentions. The AOA and MOA should state the non-profit intention of the company. The income gained by a section 8 company is used to prolong its major purposes. The earnings will not be shared between the company’s associates.
- Get DSC
Digital signatures of the suggested company’s directors are needed as the forms for the registration are filed digitally. They must also be signed digitally. Reputed certifying entities provide DSC or Digital Signature Certificates Online. IDRBT, NIC, E-Mudhra, CDAC, Pantasign, Capricorn, Verasys, XtraTrust, IDSIGN, and many others can do so. To get a DSC, you must pay a fee that often differs depending on the certifying entity.
- Directors
There is the requirement of at least two directors in the case of a sec 8 company that is to be assimilated as a private limited firm. On the other side, at least three directors are mandatory when incorporating a public limited firm.
- Rules under Certain Acts
Sec 8 companies must stick to all Company Act laws and guidelines. They must keep account books and file tax returns with MCA. They can’t alter the provisions of AOA and MOA with no previous Central Government approval. They have to abide by the GST and Income Tax Act regulations provisions.
- Management
A sec 8 company is regulated and looked after by BODs (Board of Directors) according to the firm’s AOA and MOA. This is very different from other companies regulated by the Trustees.
All About Procedure For Registration Of Section 8 Company
First step: As soon as the DSC is attained, it’s time to fill Form DIR-3 with the ROC to attain a DIN. The evidence of address and identity must be attached to get the DSC.
Second step: After the approval of DIR-3, the ROC will give a DIN to the future director.
Third step: File Form INC-12 for applying for a permit for the sec 8 company combined with the attachment of the necessary documents.
Fourth step: Following the approval of the Form, a permit within sec 8 will be granted in Form INC-16.
Fifth step: Once the permit is received, you must file the SPICe+ Form along with the ROC for incorporation. Also, you must attach the attachments as mentioned earlier.
Conclusion
Registering a sec 8 company has numerous benefits, and such a company is more credible than society or trust. They are exempted from stamp duty and do not necessarily need to include the suffix private limited in their company name. These companies can be created easily, and there is no requirement with no share capital. The required funds to run the organisation are attained in subscriptions or donations from common people and associates.
Get connected with Vakilsearch to get your NGO registered under Section 8 in no time. To learn more, consider our free consultation.
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