How to Do Registration for Section 8 Company?

20 Nov 2024

Registration for Section 8 Company: A Section 8 Company, also known as a Non-Profit Organization (NPO), is designed for promoting charitable objectives like education, social welfare, environmental protection, and more. The income generated by these companies is exclusively used to further their purpose, and they cannot distribute profits among members. Registering a Section 8 Company involves specific steps and compliance with guidelines set by the Ministry of Corporate Affairs (MCA). In this blog, we will explain how to complete the registration for Section 8 Company, its benefits, requirements, and essential compliance procedures. Trustlink India is the best service provider for smooth and hassle-free Section 8 Company registration.

Key Features of Section 8 Companies

Before we dive into the process of registration for Section 8 Company, let’s understand its defining features:

Charitable Purpose: Section 8 Companies operate solely to promote areas like commerce, arts, education, research, sports, environmental protection, or social welfare.
No Profit Distribution: Unlike other companies, Section 8 Companies cannot share profits with their members. Any earnings must be reinvested into their charitable objectives.
Government Approval: These companies require a license from the central government to operate.
Simplified Incorporation Process: Recent amendments have made the registration process easier and more efficient.
Legal Entity: Section 8 Companies are separate legal entities, offering limited liability protection to their members.

Steps for Registration for Section 8 Company

Here’s a detailed guide to registering a Section 8 Company in India:

Step 1: Obtain a Digital Signature Certificate (DSC)

The first step is to acquire a DSC for the proposed directors. It is used to digitally sign the registration forms.

Step 2: Reserve a Unique Name

The company’s name must align with its charitable purpose and comply with MCA guidelines. Use the SPICe+ Form (Part A) to check and reserve the name.

Step 3: Draft MOA and AOA

Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) in Form INC-13. These documents define the company’s objectives and rules.

Step 4: File SPICe+ Form (Part B)

Submit the incorporation application via the SPICe+ Form, along with the required documents. This step also includes applying for PAN and TAN.

Step 5: Obtain License Number

The government will review the application and issue a license under Section 8 of the Companies Act, 2013.

Step 6: Certificate of Incorporation

Once the application is approved, the Registrar of Companies (RoC) will issue the Certificate of Incorporation, allowing you to begin operations.

Trustlink India provides expert assistance at every step of this process, ensuring your application is accurate and meets all legal requirements.

Documents Required for Registration for Section 8 Company

To successfully register a Section 8 Company, you will need the following documents:

Identity Proof: PAN, Aadhaar, or Passport of directors and members.
Address Proof: Recent utility bill or property tax receipt of the registered office.
Digital Signature Certificate (DSC) for all directors.
Director Identification Number (DIN) for proposed directors.
Passport-Sized Photographs of directors and members.
Draft MOA and AOA in Form INC-13.
Declaration Forms:
- Form INC-14: Declaration that the MOA and AOA comply with the provisions of the Companies Act.
- Form INC-15: Declaration by each member regarding adherence to Section 8 requirements.
- Form INC-9: Declaration by first directors and subscribers.

Simplified Process of Incorporation

The Companies (Incorporation) Sixth Amendment Rules, 2019, introduced significant changes to simplify the incorporation process for Section 8 Companies. You no longer need to file Form INC-12 separately, as the license can now be obtained directly during incorporation through the SPICe+ Form.

Benefits of Registering a Section 8 Company

Tax Benefits: Section 8 Companies enjoy various tax exemptions under the Income Tax Act, including Section 12A and Section 80G benefits.
Limited Liability: Members are not personally liable for the company’s debts.
Credibility: Government approval lends legitimacy and trustworthiness to the organization.
Grants and Subsidies: Eligible for government grants, financial aid, and other incentives.
Legal Entity: Acts as a separate legal entity, allowing the company to own property and enter into contracts.

Trustlink India ensures that you receive all the benefits associated with Section 8 Company registration while guiding you through the compliance process.

FAQs Related to Section 8 Company

1. How many types of company registration are there?

There are several types of company registrations in India, including private limited, public limited, Section 8, limited liability partnership (LLP), and sole proprietorship. Section 8 Company is specifically for charitable purposes.

2. What is an example of a Section 8 Company?

Educational institutions, environmental organizations, and social welfare societies are common examples of Section 8 Companies. These organizations reinvest their profits to promote their objectives.

3. Can a Section 8 Company sell property?

Yes, but only if the sale aligns with the company’s objectives. The proceeds must be used for charitable purposes, not for profit distribution among members.

4. What are the benefits of Section 8 Companies?

Section 8 Companies offer tax exemptions, limited liability, and credibility. They also enjoy financial aid and grants from the government and other institutions.

5. What is Section 8 of the Ministry of Corporate Affairs?

Section 8 of the Companies Act, 2013, governs the registration and operation of non-profit companies in India, defining their purpose, benefits, and compliance requirements.

Common Questions Answered

1. How many types of OPC cement are there?

While not directly related to company registration, OPC cement refers to Ordinary Portland Cement, which is available in three grades: 33 Grade, 43 Grade, and 53 Grade.

2. Can a Company with unlimited liabilities be registered as a Section 8 Company?

No. Rule 20(1) of the Companies (Incorporation) Rules, 2014 provides that only a limited company registered under this Act or under any previous company law shall make an application to the Registrar for issue of license. Therefore, a company with unlimited liabilities cannot be registered as a Section 8 Company.

3. Is it necessary that Section 8 Companies are to be incorporated as a limited company with share capital?

Section 8 Company may be incorporated as a company limited by shares or by Guarantee (with or without share capital).

4. Is it mandatory that the name of section 8 Company shall include the words like – Foundation, forum, association, federation, chamber, confederation, Council, electoral trust etc.?

Yes. As per rule 8(7) of the Companies (Incorporation) Rules, 2014, for the Companies under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc.

5. Can a One Person Company (OPC) be incorporated as or convert into a Section 8 Company?

No. Rule 3 of the Companies (Incorporation) Rules, 2014 prohibits a one person company to be incorporated as section 8 company or to convert into a Section 8 Company.

6. Can a one person company become a member of Section 8 Company?

No, Rule 3(6) of the Companies (Incorporation) Rules, 2014 prohibits one person company to invest in securities of any body corporate.

7. Can a Limited liability partnership be registered/ converted in to a Section 8 Company?

Yes. Section 8(1) of the Companies Act, 2013 allows person or association of persons to be registered as a Section 8 Company on fulfillment of certain conditions and procedure as prescribed therein. The term “person” has not been defined in the Companies Act, 2013. Section 2(41) of the General Clauses Act, 1897 provides that “person” shall include any Company, or association or body of individuals, whether incorporated or not. Accordingly, a Limited Liability Partnership is a person. Therefore, it can be registered/ converted as a Section 8 Company.

8. Can a partnership firm be registered/converted in to a Section 8 Company?

Therefore, a partnership firm can be registered as a Section 8 Company.

9. Whether a Section 8 Company can be converted into a One person Company?

No, Rule 7(1) of the Companies (Incorporation) Rules, 2014 prohibits conversion of Section 8 Company to one Person Company.

10. Whether the object of Section 8 Company can extend beyond the India?

Yes. Clause 4 of the Form INC 13 (Memorandum of Association) filed in pursuant to Rule 19(2) of the Companies (Incorporation) Rules, 2014 requires to state that “The objects of the company extend to the ……… .” Further states that “here enter the name of the State or States, and Country or Countries.” Accordingly, the objects of Section 8 Company may be extended beyond India.

11. Can a partnership firm or an Limited Liability Partnership become a member of Section 8 Company?

Yes, under the Companies Act, 2013, a Partnership firm or an LLP can become the member of Section 8 Company. The provisions of respective Acts need to be complied with by the partnership firm or LLP as the case may be.

12. What are the different types of OPC communication?

In a business context, OPC (Other People’s Communication) can refer to formal and informal communication methods. However, this is unrelated to Section 8 Companies.

Annual Compliance for Section 8 Companies

Statutory Audit: Books of accounts must be audited annually by a Chartered Accountant.
Board Meetings: At least one meeting must be conducted every six months.
Annual Returns: File Form MGT-7 with the RoC within 60 days of the AGM.
Financial Statements: Submit Form AOC-4 to the RoC within 30 days of the AGM.
Tax Returns: File annual income tax returns before October 31.

Conclusion – The Takeaway

Registering a Section 8 Company is an excellent way to contribute to society while enjoying the benefits of a structured legal entity. With the registration for Section 8 Company, you can focus on your charitable goals while benefiting from tax exemptions and government grants. Trustlink India is your trusted partner in ensuring a smooth and efficient registration process, guiding you every step of the way. Turn your vision into reality with Trustlink India’s expert services!

by Corporate Advisory, TRUSTLINK

Discussion Desk - TRUSTLINK