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A company referred to as a Section 8 Company is registered as a Non-Profit Organization (NPO) or aspires to advance the arts, commerce, education, charity, religion, social welfare, sports, science, or the environment.
The NPO’s income must be utilized for further charitable objectives; dividend payments to stockholders are prohibited. These companies must abide by the laws set forth by the government and receive an incorporation certificate from the central government.
The regulations state that if the Central Government’s obligations are not fulfilled, the company may be shut down on the government’s orders. The company will also take strict legal action against all of its members if it turns out that its stated objectives are false.
Benefits of section 8 company registration
A separate legal identity
The legal status of Section 8 Company and its members are separate. Along with more efficient operations and greater flexibility, the company is eternal.
Absence of minimum capital requirement
No minimum capital requirement exists in India for a Section 8 company. The capital structure might also be permanently adjusted to the firm’s changing needs.
No stamp duty
The MoA and AoA are not subject to stamp duty for a Section 8 Company.
After a Section 8 company’s legal name, the words “Public Limited or Private Limited” are not necessary. Registering these businesses as Societies, Associations, Councils, Charities, Clubs, Foundations, Institutes, Academies, Federations, and Organizations is possible.
Section 8 Companies in India enjoy numerous tax advantages.
Do not apply CARO
Companies Auditor’s Report Order (CARO) does not apply to Section 8 Companies.
Companies of Section 8 are strictly governed by the Companies Act, which stipulates requirements like the necessity of an annual audit that cannot be changed under any circumstances. These companies’ profit and loss controls give them credibility.
A registered partnership firm may sign up as an individual member and become a director.
Exemption to donors
Contributors to Section 8 companies are excluded from paying taxes under Sections 12A and 80G of the Income Tax Act.
Eligibility criteria for section 8 company registration
- Indian resident: At least one director must have lived in India for at least 182 days in the year prior.
- Registration – Companies Act of 2013 is the law that governs registration.
- License: To be submitted to the MCA
- Directors: A public limited company requires a minimum of three directors—a minimum of two directors for a private limited company.
- MoA subscribers: Subscribers to the MoA are necessary. There must be at least two or three subscribers.
- Initial capital: The projected initial money for the company’s establishment must be invested within two months.
- MoA & AoA: Describe the name to be used, the goals the company will pursue, the anticipated location of the registered office, the number of Directors and promoters, the authorized capital, and the number of shares each promoter will subscribe for.
- Property management: The property is owned by the company and can only be sold following the guidelines outlined in the Companies Act.
- Annual compliance: The company must file annual accounts, statements, and returns as per government laws.
- Dissolution: Only according to the society’s bylaws may the Section 8 Corporation be dissolved. After dissolution and complete payment of all debts and responsibilities, the society’s assets will not be dispersed among its members.
Requirements for section 8 company registration
A minimum of two directors are required to incorporate the Section 8 company as a private limited company; a minimum of three directors are required to incorporate the company as a public limited company.
Companies created under Section 8 are intended for charitable purposes. The MOA and AOA must state the non-profit purpose for which it was established.
Capital Requirement and Name
A minimum paid-up capital requirement is not necessary for Section 8 company incorporation. No usage of “Limited” or “Private Limited” must appear in the name of NGOs formed as Section 8 companies.
A regulation under Various Acts
The 2013 Companies Act mandates that Section 8 companies follow its guidelines. It is required to file a return with the Registrar of Companies and maintain accurate books of accounts.
The MOA and AOA of the company Section 8 are managed by the Board of Directors in contrast to other trusts, which the Trustees manage by the Trust Deed.
Apply for Director Identification Number (DIN)
The proposed directors of the company require a DIN, which must be requested.
Find DSC (Digital Signature Certificate)
The proposed directors of the company must also provide digital signatures for the registration forms, which must be submitted online.
Documents required for section 8 company registration
- Members’ IDs like Aadhar cards, passports, and voter identification
- Certificate of Digital Signature
- Memorandum of Association
- Articles of Association
- Director Identification Number
- Passport size Photos
- Director Information (When Other Companies or LLPs Are Members)
- Address Proof
Section 8 company registration procedure
Get a DSC from the potential directors of the Section 8 company. To obtain a DSC, you must show proof of identification and address. Send Form DIR-3 to the ROC post getting a DSC to obtain a DIN.
Once the DIR-3 is approved, the ROC will assign a DIN to the proposed directors.
Send Form INC-12 to the ROC along with the supporting documentation to request a license for the Section 8 company.
Once Form INC-16 has been approved, a license under Section 8 will be issued.
Once you have the license, submit the SPICe+ Form and the required documents to the ROC for incorporation.
The ROC will issue a Certificate of Incorporation and a distinct Company Identification Number (CIN) if the forms are approved.
Annual compliances for section 8 company
- Calling board meetings
- Appointment of an auditor
- Maintenance of Statutory Registers
- Statutory Audit
- GST Annual Return
- Calling Annual General Meetings
- Preparing Board Reports and the company’s financial statements
- Income Tax returns
- Tax audit
- Filing Financial Statements
- Annual Return Filing
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