Section 8 Company

Any company established as a Non-Profit Organization (NPO) is referred as a Section 8 Company. It means the motive of the company is to promote arts, commerce, education, charity, protection of environment, sports, science, research, social welfare, religion and intends to use its profits (if any) or other income for promoting these objectives.

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Overview

A company is referred to as Section 8 Company when it registered as a NGO under companies act and has motive of promoting health, arts, commerce, education, charity, sports, science, research, protection of environment, social welfare, religion and wants to use its profits (if any) or other income for promoting these objects of the NGO. The income of NGO cannot be used for personal benefit of the owners by paying out dividends to the company’s members and has to be for the promotion of objectives. Such companies get registered and get the incorporation certificate from the central government and are liable to follow to the rules specified by the government. If they fail to comply with the rules stated by the Central Government may lead to the winding up of the company on the orders of government and legal action will be taken against all the members of the company.

Benefits

Separate Legal Entity:  Company is a separate legal person in the eyes of law and different from its directors and shareholders. Company can operate, contract and own assets and liabilities by its own name like any individual person.

No need for paying stamp duty:  A section 8 Company is not liable to pay stamp duty for registration, unlike other companies such as public limited companies or private limited companies.

Tax Exemption:  The profits generated by section 8 companies are fully exempted if the NGO is utilizing the profit for its charitable or religious objects and registered under section 12AA of the Income Tax Act.

List of Documents Required

Company Details
  • Two Proposed Names
  • The objective of the proposed company
Proof of Registered Office
  • Latest Utility bill i.e., electricity bill, landline bill or water bill, etc.
  • For rented place, NOC required in the name of the proposed company
Subscribers & Director’s Documents
  • PAN Card of all the Subscribers/Directors
  • Photograph of all the Subscribers/Directors
  • Aadhar Card of the Subscribers/Directors
  • Mobile No. and email id of all the subscriber/directors
  • DL/Voter ID/ passport, anyone documents of all the Subscribers/Directors
  • Bank statement/ Electricity Bill in the name of the Subscribers/Directors, anyone documents of all the subscribers/directors
Other Information
  • Share capital and voting share of directors
  • Whether director or partner in any existing Co/LLP
  • Place of birth, Occupation and Educational qualification of director
  • Present residential address and duration of stay
  • Specimen Signature of one signatory

Process

  • 1

    Apply for a name approval for your company using Spice+ Part-A.

  • 2

    Apply for DSC of subscribers and directors

  • 3

    Online preparation of Spice+ PartB, eMOA, eAOA & AGILEPRO.

  • 4

    Online filing of Spice+ Part B, eMOA, eAOA, AGILEPRO and INC-9

  • 5

    Get a certificate of incorporation, PAN & TAN of your company.

Deliverable

  • Certificate of incorporation
  • Company name approval
  • Director identification numbers (DIN)
  • Digital signature token for directors
  • Memorandum of association
  • Articles of association
  • Company PAN card
  • Company TAN number
  • ESI/PF registration

FAQs

Is there any limitation upon a Section 8 Company from doing the investments, guarantees, etc?
Yes, Section 8 firm would furnish the loans or guarantees or furnish security associated with the loan or procure through the method of subscription, purchase, etc. the securities of the company but the same must comply within section 180, 185, Section 186, and other sections, whatsoever relevant, of the Companies Act, 2013.
Does Section-8 Company subject towards any exemptions/ reliefs from payment/applicability of excise duty, etc.?
No particular privilege shall be available towards Section 8 company towards the above-prescribed acts.
What are the requirements to be a Director?
The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, even foreign nationals can be Directors in an Indian Section 8 Company.
Is an office required for starting a Section 8 Company?
An address in India where the registered office of the Company will be situated is required. The premises can be commercial/industrial/residential where communication from the MCA will be received.
Do I have to be present in-person to incorporate a Section 8 Company?
No, you will not have to be present at our office or appear at any office for the registration of a Section 8 Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.
What is a Digital Signature Certificate?
A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Section 8 Company.
Which words are mandatorily to be used in the name of section 8 Company?
The proposed name of Section 8 company shall include any one of the words i.e. Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust, etc.

Have Any Questions?

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