Overview of Registration of Section 8 Company
Registration of Section 8 Company under the Companies Act, 2013 as a Non-profit organization. As we all know NPO can be registered as Trust by executing a Trust deed or, As a society under the Registrar of Societies, or, As a non-profit company under Section 8 Company of the Companies Act, 2013.
Registration of Section 8 Company is the most popular form of Non-profit organization that is established for the-
- Promotion of commerce,
- Art,
- Science,
- Sports,
- Education,
- Research,
- Social welfare,
- Religion,
- Charity,
- Protection of environment or any such other related object”.
In layman, a Section 8 company must promote public welfare and the income generated by the company can only be used to support the stated public cause(s) only.
Benefits of Section 8 Company
Numerous benefits are provided to Section 8 Company. Few are mentioned below:-
- No Minimum Capital : In the Registration of section 8 company , there are no minimum capital criteria.
- Avail Tax Benefits : Various tax exemptions and compensations are provided to the company as well as to the donors who are contributing to Section 8 Company.
- Exempted From Payment Of Stamp Duty : No stamp duty is required on the Section 8 Company registration as the company is exempted from the payment of stamp duty applicable for registration.
- Separate Legal Identity : Section 8 Company has a separate legal entity as private/public company and has a distinct legal personality from its member.
- Credibility : Section 8 Company has more credibility as compared to any other form of a charitable organization.
- Transfer Of Ownership : Members of Section 8 Company members can easily transfer the ownership of the company.
What are the Checklists to be Considered while Registering a Section 8 Company ?
Following factors are to be considered while registering Section 8 Company :-
- The Company may be registered as a company limited by shares or by Guarantee and not with unlimited liabilities.
- It can be a holding company of another company and can promote another company.
- The company cannot be amalgamated with a company that is not a Section 8 company.
- There must be at least 1 meeting within every six-calendar month.
- Non-applicability of Section 149(1), Section 178 of Companies Act, 2013
- Secretarial Standards are not applicable.
- No proxy by the members.
What are the Documents Required for Registration of Section 8 Companies?
Below-mentioned documents are required for Registration of Section 8 Company :-
- The Articles of Association
- Memorandum of Association
- Declaration by the subscribers and by the directors
- A confirmation for the address of the office
- Two months utility bills copy
- Certificate of incorporation of the Outer Country body corporate [If applicable]
- A resolution passed by the global Company [If applicable]
- A recommendation declared by the promotional Company [If applicable]
- The interest of the directors from other entities [If applicable]
- Nominee’s assent
- Identity proof and residential address of the subscribers and the nominees
- Identity proof and residential address of Applicants
- The Declaration/Resolution of the unregistered companies
- DSC (Digital Signature Certificate)
- Any other document [If required]
Inclusions
- Help you with documentation
- Drafting & filing of application form
- Deliver license in agreed time-frame
- End-to-end Support
FAQs
Who is eligible to apply for the registration of a Section 8 company?
An application for a section 8 company can be made by any person or an association of persons, provided:
The object of the company is to further the ideals of arts, science, research, culture, education, and social welfare in general
After its incorporation, the company uses its profits in promoting its objectives
The company refrains from paying dividends or shares to its members.
Who comes under the definition or persons or association of persons mentioned in Section 8?
The Companies Act, 2013 does not define the term ‘persons’. Hence the definition can be inferred from Section 2 (41) of the General Clauses Act, 1897 which mentions that the term ‘persons’ may include individuals or associations of individuals and Companies.
What is the procedure to register a Section 8 company?
An application has to be made using Form INC-12 to the Registrar of Companies (RoC). The following documents are to be attached alongside the application:
- The Memorandum of Association (MoA) and Articles of Association (AoA) filed through Form INC-13 and Form INC-31 respectively with the Form SPICe-32
- A declaration duly notarised by an appropriate authority through Form INC-14
- The sources of income and the possible expenditure of the company
- A declaration through Form INC-15 duly notarised by the person making the application
- Form INC-9 to be furnished by the directors, on appropriate stamp paper and having it duly notarised
- A copy of the resolution of the board/members.
Who authorizes the license of a Section 8 company?
The Central government authorizes the Registrars of Companies of the respective jurisdictions to issue the license for a Section 8 company.
Does Section 8 allow a company with unlimited liabilities to be registered?
As per the Companies (Incorporation) Rules, 2014, only a company with limited liabilities can be registered under the Act.
Is it mandatory that only a company limited by shares can be incorporated under Section 8?
No. Section 8 accommodates both companies limited by shares or by guarantee, i.e with or without share capital.
Is it possible to register a One Person Company (OPC) or convert one to a Section 8 Company?
No. The Companies Incorporation (Rules), 2014 forbids OPC to be incorporated or converted to a Section 8 company.
Is it possible to register a foreign company as a Section 8 company in India?
As per the Companies Act, 2013, a foreign company is a body corporate that is established outside India and operates its business in India, either directly or through an agent, physically or via electronic mode, and conducts its course of business in India.
On the other hand, a corporate company incorporated outside India to carry not-for-profit activities, cannot fall under the ambit of a foreign company, as there is no business activity that is being carried out. Therefore, the respective company cannot be termed as a foreign company.
However, within the norms of FEMA (Foreign Exchange Management Act, 1999) regulations, the company can institute branch offices.
Whether Trusts or Co-operative Societies can become a member or subscriber of a Section 8 company?
Yes. The Companies Act, 2013 does not prohibit a Trust or Co-operative Society from becoming a member of a Section 8 company.
Can contributions or financial aid be extended from overseas or non-residents to Section 8 companies?
The contributions made to Section 8 companies from overseas or non-resident Indians must bear compliance with the norms laid out under the Foreign Contribution and Regulation Act, 2010.
The contributions can therefore be received in accordance with the Companies Act, 2013 in addition to the Foreign Contribution and Regulation Act, 2010.
What are the Consequences in case of Non-Compliance is done by Section 8 Companies?
Every Section 8 company needs to follow the compliance levied by Income tax authorities and Registrar of Companies. If the company fails to satisfy the requisite compliance, it can cause heavy penalties up to Rs 1 lakh in a year.
What if the Company gets Registered under Section 80G?
If a Registration of section 8 company under section 80G then the individual or entity donating to the Non-profit company will get a deduction of 50% from their taxable income.
As per the Finance, Act 2020, the amendment was made i.e. With effect from first June 2020, All the existing charitable and religious institutions (including NGOs) which are registered or approved under the following sections-
1. Section 12A
2. Section 12AA
3. Section 10(23C)
4. Section 80G
These are compulsorily required to switch to section 12AB for fresh registration to continue availing exemption under section 10 or 11.
What Annual Compliances are required to be made for Section 8 Companies as per the Companies Act 2013?
Section 8 companies are required to comply with the Annual Docility as per the Companies Act 2013-
- Two board meetings in a year
- Preservation of Books of accounts
- Compulsory audit.
- Income tax return filing.
- Filing AOC-4 and MGT-7
- Registering for 12AB.
- Adoption of financial statement.
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