Section 8 Company Registration
Introduction: A Section 8 Company, also known as a non-profit organization or a not-for-profit company, is a unique form of organization established for promoting social welfare or undertaking charitable activities. Unlike other types of companies, the primary objective of a Section 8 Company is not to earn profits but to serve a specific social or charitable purpose. In this comprehensive guide, we will explore the process of Section 8 Company registration in India, including its benefits, requirements, and step-by-step procedures.
Section 8 Company Registration: An Overview: Section 8 Companies in India are governed by the Companies Act, 2013, and are regulated by the Ministry of Corporate Affairs (MCA). These companies are formed for promoting fields such as education, science, research, art, social welfare, religion, environment, and other charitable activities. The key distinguishing feature of a Section 8 Company is that it can be incorporated without the requirement of adding "Limited" or "Private Limited" to its name.
Benefits of Section 8 Company Registration
- Tax Exemptions: Section 8 Companies enjoy various tax benefits, including exemption from income tax on surplus income applied for charitable purposes.
- Limited Liability: Members of a Section 8 Company have limited liability, safeguarding their personal assets.
- Credibility and Trust: Section 8 Companies have a higher level of credibility and trust among stakeholders due to their focus on social welfare activities.
- No Minimum Capital Requirement: There is no minimum capital requirement for incorporating a Section 8 Company, making it accessible to a wider range of individuals and organizations.
- Access to Funding: Section 8 Companies can attract donations, grants, and foreign funding, enhancing their financial stability.
Requirements for Section 8 Company Registration : To register a Section 8 Company in India, certain requirements must be met:
- Minimum Directors: A minimum of two directors are required for incorporation, and at least one of them must be an Indian resident.
- Minimum Members: A minimum of two members are needed to form a Section 8 Company.
- Name Reservation: Choose a unique and appropriate name for the company, following the naming guidelines specified by the MCA.
- Memorandum and Articles of Association (MOA and AOA): Prepare the MOA and AOA, which outline the objectives, activities, and rules and regulations of the company.
- No Profit Distribution: The company's primary objective should be to promote charitable activities, and it should not distribute any profits to its members.
- Registered Office: Provide a valid address for the registered office of the Section 8 Company within 30 days of incorporation.
Step-by-Step Procedure for Section 8 Company Registration:
- Obtain Digital Signature Certificates (DSC): The first step is to obtain DSC for all directors and shareholders of the proposed company. DSC is required for digitally signing the incorporation documents.
- Apply for Director Identification Number (DIN): Each director must apply for a DIN by submitting Form DIR-3 and supporting documents to the MCA.
- Name Reservation: Submit Form SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) to reserve a unique name for the Section 8 Company. The proposed name should adhere to the naming guidelines specified by the MCA.
- Preparation of Incorporation Documents: Prepare the necessary incorporation documents, including the MOA and AOA, Form SPICe+, declaration by professionals, and affidavits of directors.
- Submission of Incorporation Documents: File the incorporation documents, along with the required fees, on the MCA portal. This includes Form SPICe+, MOA, AOA, and other necessary documents.
- Verification and Approval: Once the documents are submitted, the MCA will verify and process the application. If there are any discrepancies or additional information required, the MCA may request clarifications.
- Certificate of Incorporation: Upon successful verification, the MCA will issue a Certificate of Incorporation (CoI) specifying the date of incorporation and the unique Corporate Identification Number (CIN) assigned to the Section 8 Company.
- Application for Tax Exemptions: After incorporation, the Section 8 Company can apply for tax exemptions under Section 12A and Section 80G of the Income Tax Act, 1961.
- Post-Incorporation Compliances: A Section 8 Company must comply with various post-incorporation requirements, such as conducting regular board meetings, maintaining proper books of accounts, filing annual financial statements, and adhering to statutory obligations.