Legal Advisor

Section 8 Company Registration – An Overview

A Section 8 Company, also known as a not-for-profit organization, is incorporated under the Companies Act, 2013 to promote various social, economic, scientific, educational, religious, and charitable objectives. The process of registration for a Section 8 Company is similar to that of a regular company, with a few notable differences. One such difference is that Section 8 Companies do not need to include the words “Limited” or “Private Limited” in their name. They require a minimum of two directors and two shareholders, and there is no minimum capital requirement. One of the primary advantages of registering a Section 8 Company is the tax exemption they receive, as well as the assurance that their surplus funds are solely used for their stated objectives. Registering as a Section 8 Company provides an excellent opportunity to establish a non-profit organization and make a meaningful impact on society.

Benefits of Section 8 Company Registration

Establishing a non-profit organization as a Section 8 Company offers numerous benefits for those looking to make a difference in society. Here are some of the advantages of Section 8 Company Registration:

• Tax Exemptions: Section 8 Companies are eligible for tax exemptions under the Income Tax Act, which makes it easier for them to focus on their charitable or social activities without worrying about tax burdens.
• Limited Liability: The members of a Section 8 Company have limited liability, which means that their personal assets are protected in case of any legal or financial issues faced by the organization.
• Credibility and Recognition: Being registered as a Section 8 Company lends credibility and authenticity to the organization, which can help in gaining recognition and support from donors, partners, and the public.
• Access to Grants and Funding: Section 8 Companies are eligible to receive funding and grants from the government, international organizations, and other non-profit institutions, which can be used to further their stated objectives.
• Perpetual Existence: A Section 8 Company can continue to operate even if the original members or directors leave the organization, providing for perpetual existence.
• Flexible Governance: Section 8 Companies can have a flexible governance structure, allowing them to operate efficiently while also adhering to legal and regulatory requirements.
• Social Impact: The primary objective of a Section 8 Company is to promote charitable or social objectives, enabling them to make a positive impact on society and contribute to the greater good.

Donations/Funding of Sec 8 Company

Requirements for Online Registration of Sec 8 companies

Online registration for a Section 8 Company is a hassle-free process that can be completed from the comfort of your own home or office. To register your Section 8 Company online, you must fulfill a few requirements, such as obtaining a Digital Signature Certificate (DSC) for all proposed directors and shareholders of the company, and a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA) for all proposed directors. The next step is to apply for name reservation, where the proposed name must be unique and not already registered with the MCA, and can be reserved for 20 days. After that, the Memorandum of Association (MOA) and Articles of Association (AOA) must be drafted and submitted online, which outline the objectives, rules, and regulations of the company. The company must also obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department. Finally, the registration fees must be paid online, based on the authorized capital of the company. Following these simple steps can get your Section 8 Company registered online in no time.

Name Approval of Section 8 Company Registration

To ensure the smooth and timely registration of a Section 8 Company, it is essential to adhere to the specific guidelines and regulations set by the Ministry of Corporate Affairs (MCA) when proposing a name for the company. The proposed name must align with the organization’s objectives and should not be too similar to an existing company’s name. It is also crucial to ensure that the proposed name does not violate any provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950. To apply for name approval, the MCA has introduced an online platform known as “RUN” (Reserve Unique Name), where the applicant can provide up to two alternative names in case the primary name is not available. Once the name is approved, it is reserved for a period of 20 days, during which the applicant must complete the remaining registration formalities and submit the necessary documents. If the registration is not completed within 20 days, the name reservation will expire, and the applicant will have to reapply for name approval. Therefore, it is crucial to select a name that is aligned with the organization’s objectives and complies with the MCA’s regulations to avoid any delays in the registration process.

Sec 8 Company Registration Eligibility Criteria

In order to register as a Section 8 Company, the applicant should be an individual or a group of individuals who wish to establish a non-profit organization for promoting art, science, commerce, charity, or any other useful purpose. The company should have a minimum of two directors, with at least one of them being a resident of India. Moreover, the company’s objectives should be in line with the provisions of Section 8, which mandate that its profits or income should be utilized towards promoting the organization’s objectives rather than being distributed among the members. The company should also have a registered office address in India, which should be furnished during the registration process. Finally, if the company requires any licenses or permits for its operations, it should obtain them and submit them during the registration process. These eligibility requirements are meant to ensure that only those who have the intention of establishing non-profit organizations for the betterment of society can register as a Section 8 Company, and adherence to these requirements is crucial for a hassle-free registration process.

Documents Required for Registration of Section 8 Company

To register a Section 8 Company, multiple documents must be submitted to verify the identity of the company and its directors, as well as their eligibility to form the company. The required documents include the Memorandum of Association (MoA) and Articles of Association (AoA), which define the company’s goals, rules, and regulations. The directors must also provide their identification proof, such as an Aadhaar card or passport, and address proof, such as a utility bill or bank statement. Additionally, proof of the company’s registered office address, such as a rental agreement or property tax receipt, must be submitted. A declaration stating that the company will operate as a non-profit organization and use its profits or income to further its objectives must also be submitted. If licenses or permits are necessary for the company’s operations, they must be included in the registration process. These documents are critical to confirming the company’s legitimacy and ensuring compliance with the regulations set forth by the Ministry of Corporate Affairs. It is crucial to make sure that all documents are accurate and complete to avoid any delays or rejections in the registration process.

Online Section 8 Company Registration – A Detailed Process

The process of online registration for a Section 8 Company involves several steps that are detailed below:

Step 1: Obtain Digital Signature Certificate (DSC) To file the registration documents online, all directors of the company must obtain a DSC.

Step 2: Obtain Director Identification Number (DIN) The directors must obtain a unique identification number called DIN, which is assigned to all directors in India.

Step 3: Apply for Name Approval Applicants must apply for name approval using the MCA’s online platform “RUN” (Reserve Unique Name), providing up to two alternative names in case the primary name is not available.

Step 4: Draft Memorandum and Articles of Association (MoA and AoA) The MoA and AoA must be drafted in compliance with the Section 8 Company provisions and uploaded on the MCA portal.

Step 5: Obtain License and Permits If any licenses or permits are required for the company’s operations, they must be obtained and uploaded during the registration process.

Step 6: Apply for Incorporation Once all the above steps are completed, the applicant can apply for incorporation through the MCA’s online platform “SPICe+” (Simplified Proforma for Incorporating Company Electronically Plus).

Step 7: Pay the Registration Fees The applicant must pay the prescribed registration fees through the MCA portal.

Step 8: Verification and Approval The MCA will verify the application and documents submitted and approve the registration if everything is in order.

Step 9: Obtain Certificate of Incorporation Upon approval, the applicant will receive a Certificate of Incorporation, confirming the formation of the company.

Online registration for a Section 8 Company is a convenient and hassle-free way to form a non-profit organization. However, it is important to ensure that all documents and information submitted are accurate and comply with the regulations set by the Ministry of Corporate Affairs.

Section 8 Company Compliances

After registering a Section 8 Company, it is crucial to adhere to the regulations and guidelines established by the Ministry of Corporate Affairs (MCA). Non-compliance can result in penalties and legal action against the company and its directors. Some of the mandatory compliances for Section 8 Companies include holding Board and Annual General Meetings, maintaining proper books of accounts, and filing annual returns with the Registrar of Companies (RoC). The company’s financial statements must be audited by a qualified Chartered Accountant, and the audit report must be submitted with the annual returns. Proper records of all transactions, including receipts and payments, must also be maintained. Additionally, any changes in the company’s registered office address or directors must be reported to the RoC within a specified period. Ensuring timely and accurate compliance is crucial to maintaining the company’s reputation and avoiding any legal issues or penalties. Seeking the assistance of a professional Chartered Accountant or Company Secretary can help ensure proper compliance and avoid any penalties or legal issues.

FAQs on Section 8 Company Registration Online

1. Can a foreign national or NRI become a director of a Section 8 Company?

Yes, foreign nationals and NRIs can become directors of a Section 8 Company, as long as they comply with the requirements set by the Ministry of Corporate Affairs.

2. Can a Section 8 Company change its registered office address after registration?

Yes, a Section 8 Company can change its registered office address after registration by filing the necessary forms with the Registrar of Companies and paying the required fee.