Are you passionate about making a positive impact in your community? If yes, registering a Section 8 Company in India might be a perfect choice for you. Governed by the Companies Act, 2013, a Section 8 Company is a non-profit organization/ charitable organization in a corporate form. It is formed to promote charitable, educational or social objectives. An NGO established as a Section 8 Company is governed by Ministry of Corporate Affairs (MCA). On the other side, an NGO established as a trust or society is governed by the Registrar of Societies/ Charity Commissioner in respective state. This comprehensive article will provide you step-to-step guide about “How to Register Section 8 Company in India”.
Objectives of Non-Profit Organization Registration
If you want to register a Section 8 Company in India, you must first identify the objectives which such company is intended to serve. A Section 8 Company can be formed to serve the objectives as follows:
- Art or Science
- Commerce
- Sports
- Education or Research
- Charity
- Social Welfare
- Environmental Protection
- Any other objects incidental to above objects.
Section 8 Company is not intended to earn profits. Therefore, the surplus of a Section 8 Company is not distributed as dividend amongst its shareholders. Section 8 Company can apply surplus only towards promoting the objectives of the company.
Benefits of Section 8 Company
- Limited Liability: The shareholders or members of Section 8 Company has a limited liability to the extent of their share capital or Guarantee. It means that they are not personally liable for debts of the company beyond their capital contribution (company limited by capital) or Guaranteed amount (company limited by guarantee).
- Higher Credibility: A Section 8 Company enjoys a higher credibility in comparison to other form of NGOs like trusts or society. This is because of the fact that a Section 8 Company is registered and license by the Ministry of Corporate Affairs of India.
- Exemption to donors: Donations made by a donor to a Section 8 Company having a Section 80G registration is eligible to tax exemptions under the Income Tax. This helps Section 8 Company in fundraising.
- Tax exemptions under Section 12AA: A Section 8 Company registered under section 12A/12AB of the Income Tax Act is eligible for tax exemptions on their surplus profits every year. This helps company in saving surplus and utilizing it for promoting their social welfare objectives.
- No minimum Paid up Capital: A section 8 company does not have any minimum paid up capital obligation. Thus, a Section 8 Company can be formed without introducing any capital and without any stamp duty charges across India.
What is the Eligibility of Section 8 Company Registration
- The objective must be to promote any one or more of the following- sports, education, art and culture, science and research or helping poor sections of society etc.
- There must be two or more persons as shareholders or directors who shall comply all the requirements relating to registration of Section 8 Company.
- Out of these two, at least one director should be a resident of India.
- Profits of Section 8 Company are not allowed to be used for personal purposes. There is no restriction on utilizing profits towards objectives of the company.
- Founders or promoters of the company including directors are not permitted to draw remuneration from the company.
- The name of Section 8 Company should end with words namely “Foundation”, “Association”, “Society”, “Council”, “Club”, “Institute”, “Organisation”, “Federation” etc.
What are the steps to register a Section 8 Company in India
Here is the step-by-step guide to help you know the process of registering a Section 8 Company in India:
Step-1: Obtain a Digital Signature Certificate (DSC)
To start the Section 8 Company Registration process, obtaining a DSC is the foremost and most important step. All documents relating to registration are filed online which are to be digitally signed using DSC. DSC is required to be obtained for all the proposed directors.
DSC can be obtained by applying to certifying authorities. You need to submit identity proof and address proof for this purpose. A copy of PAN Card and Aadhar Card will serve the purpose.
Step-2: Obtain Director’s Identification Number (DIN)
DIN is mandatory for all the proposed directors of the company for registering a Section 8 Company. You can apply for DIN in Form DIR-3 or along with the SPICe+ form for registration.
This form needs to be attested by a practicing Chartered Accountant, a Company Secretary or a Cost Accountant. You need to attach self-attested copy of PAN, Identity proof (Aadhar) and Address Proof (Voter ID or Driving License or Passport) along with Form DIR-3. Once approved, the MCA will issue a unique DIN to every director of the company.
Step-3: Name Reservation for Section 8 Company
The Companies Act, 2013 prescribes a guideline for desirable names of any company. Your company need to have name adhering to those guidelines. For example, the name of the company should not indicate patronage or association of Government. It must be unique and not resemble the name of any existing company or trademark.
A new company seeking to reserve its name needs to apply for reservation by filing FORM SPICe+ PART A with Central Registration Centre (CRC) of MCA. The nominal fees for name reservation charged by MCA are Rs. 1,000. The name so reserved will be available up to 20 days for registering a new company. The user also have an option to extend the reserved name validity beyond 20 days.
Step-4: Preparation of necessary documents
- Memorandum of Association (MOA): MOA is the most critical document of any company. It acts as charter of the company. It states the information namely capital, registered office address, objects of the company etc.
- Articles of Association (AOA): AOA is a set of procedures for governing internal management of the company. AOA should ensure that the company shall conduct its activities for non-profit objectives.
- Proofs of identity of Directors & shareholders: Self attested copies of PAN, Aadhar and one additional proof (Voter ID/ Passport/ Driving License) of every director and shareholder should be arranged.
Step-5: Submitting application for registration of Section 8 Company
AS per the new simplified registration process, you need to file FORM SPICe+ (INC-32) which is an integrated form for reservation of name, incorporation of new company and/ or application for allotment of DIN and/or application for PAN and TAN. This eform is accompanied by supporting documents including details of directors & subscribers to MOA and AOA. Attachments with FORM SPICe+ are as follows:
- Memorandum of Association
- Articles of Association
- Proof of Registered Office Address (Copy of Utility Bills)
- Declaration by First Directors and Subscribers
- Interest of First Directors in other entities
- Proof of Identity and Proof of Residential address of subscribers
- Declaration from a practicing professional in Form INC-14
- Declaration from each person making application in Form INC-15
Once the eForm is processed by MCA, the company will be allotted a unique “Corporate Identification Number “(CIN) and issue a “Certificate of Incorporation” showing such CIN. In addition, PAN and TAN will also be issued to the company.
Why Choose Taxwink?
The registration process of a Section 8 Company is technical and could be completed only with the assistance of a professional. This is why seeking assistance from experts is necessary.
Taxwink is a leading service provider in NGO registrations including Section 8 Company Registration & Society Registration. We provide all incorporation and compliance related services for Section 8 Companies in a proficient manner.
Our team of experienced professional provides expert guidance and hands on consulting in respect of various NGO matters ranging from incorporation to compliances. This not only reduces compliance burden of NGOs but also help them focus on their core mission of social service.
Conclusion
Registering a Section 8 Company is an important step towards serving the society in a corporate manner. By following this step-by-step guide, you can fulfil your dream of bringing positive change to society.
