Section 8 Company Registration Online in India

Register a Section-8 Company in India

A Section 8 Company is all about doing good – promoting charity, art, science, education, and sports. The money it makes goes right back into these good causes and doesn't get shared among its members. The entire registration process is online and regulatory filings are paperless; documents are filed electronically through the MCA website and processed online only.

A Section 8 company can be registered online through FINLEG at a cost-effective price without any hassle. FINLEG comply with all regulations established by the Ministry of Corporate Affairs and take care of all legal formalities. You will receive a Certificate of Incorporation (CoI), along with your PAN and TAN, after the company registration process has been completed and approved by regulatory. Post Incorporation you can easily open your bank account and start the business.

What is Section 8 Company?

A Section 8 Company, as per Companies Act 2013, refers to a type of non-profit organization that operates with the primary objective of promoting activities such as charity, art, science, education, and sports. Unlike for-profit companies, the profits generated by a Section 8 Company are reinvested solely to advanceto advance these specified objectives. These profits are not distributed among the members or shareholders of the company.

The name "Section 8" is derived from Section 8 of the Companies Act, which governs the formation and operation of such companies in India. Section 8 Companies are established to contribute to the social and public welfare, and they enjoy certain privileges, including tax exemptions. The focus of these organizations is on making a positive impact on society rather than generating profits for distribution among members.

Advantages of Section 8 Company

Embarking on the journey to incorporate a Section 8 company in India presents a myriad of advantages, each contributing to the appeal of this unique organizational structure-

  • Tax Exemption: One of the standout benefits is the eligibility for a 100% tax exemption under section 12AA of the Income Tax Act. Section 8 companies direct their profits towards charitable purposes, rendering these profits non-taxable—a considerable advantage for entities dedicated to making a positive impact.
  • No Minimum Capital Requirement: Section 8 entities enjoy the freedom of operating without a minimum capital requirement. This flexibility allows them to adjust their capital structure based on their growth trajectory, providing a practical and adaptable approach.
  • Separate Legal Entity: Section 8 companies boast a separate legal identity and perpetual existence, similar to other registered companies. This not only enhances credibility but also grants these entities greater autonomy and a robust legal standing.
  • Increased Credibility: Subject to stringent legal compliance frameworks, Section 8 companies uphold a high level of credibility in terms of legal standing. Compliance adherence post-registration sets them apart from NGOs and trusts, establishing them as trustworthy entities committed to their charitable objectives.
  • No Title Required: During the registration process, Section 8 companies have the freedom to choose a name that aligns with their vision without the obligatory addition of the term "Section 8" after their name. This flexibility in naming sets them apart from other registered structures.

In summary, a Section 8 company in India offers a compelling array of benefits, including tax exemption, no minimum capital requirement, separate legal identity, heightened credibility, and the freedom to choose a name without specific title requirements. These advantages make Section 8 companies an appealing choice for entrepreneurs seeking to establish a business with a charitable or social cause.

Checklist for Registration of Section 8 Company in India

The Companies Act of 2013 requires us to ensure that the checklist's requirements are met-

Number of Directors

For a Section 8 entity opting to function as a private limited company, a minimum of two directors is mandatory. However, if the entity chooses to operate as a public limited company, a minimum of three directors is required.

Number of Members

In the case of a Section 8 company operating as a private limited company, the Ministry of Corporate Affairs (MCA) sets a cap of 200 members. However, there is no such limit for Section 8 entities structured as public limited companies.

Capital Requirement and Name

As per the Companies Act 2013, Section 8 entities are not obligated to maintain a minimum paid-up capital. Additionally, NGOs functioning as Section 8 entities are not required to include terms like "private limited" or "limited" in their name.

Company Objects

Only entities with non-profit objectives qualify for Section 8 registration. The Memorandum of Association and Articles of Association must explicitly outline these objectives for which the company is established. Profits generated by the Section 8 entity must be dedicated to charitable purposes or reinvested in the entity. Such legal requisites ensure that Section 8 companies operate transparently, with a genuine commitment to promoting social welfare.

Ensuring compliance with these legal requirements is essential for the smooth and transparent functioning of Section 8 companies, aligning them with their core mission of contributing to social welfare.

Minimum Documents required for registration of Section 8 Company in India

To facilitate the seamless incorporation of a Section 8 company in India, the following documents are essential:

Articles of Association (AOA) and Memorandum of Association (MOA)

The foundational documents that outline the company's objectives, structure, and internal regulations.

Declaration by the First Director(s) and Subscriber(s)

An affidavit is not required, but a declaration confirming compliance with incorporation requirements is necessary.

Proof of Office Address

Submission of utility bills like electricity, water, or gas bills is mandatory to verify the registered office address.

Copy of Certificate of Incorporation (COI) of Overseas Corporate Body (if applicable)

If the Section 8 company involves an overseas corporate body, a copy of its Certificate of Incorporation is necessary.

Resolution Passed by the Promoter Company

A formal resolution passed by the promoter company, endorsing the establishment of the Section 8 entity.

Consent of Nominee (INC-3)

The nominee's formal consent for appointment, as per the prescribed INC-3 form.

Residential and Identity Proof of Nominees and Subscribers

Documents verifying the identity and residential address of both nominees and subscribers.

Applicant's Identity and Residential Proof

Documents establishing the identity and residential address of the primary applicant.

Digital Signature Certificate (DSC)

The digital signature certificate is essential for online submission of documents and forms during the incorporation process.

Declaration of Unregistered Companies

A declaration confirming that the proposed company has not been registered previously.

By furnishing these documents, you ensure a smooth and efficient Section 8 company incorporation process. It's essential to compile and submit accurate and complete documentation to comply with regulatory requirements and facilitate a hassle-free registration.

Step-by-Step Guide to Creating a Section 8 Company in India

The registration process of your private limited Company is a complicated process with numerous requirements. However, as long as you have FINLEG, you need not be concerned because our professionals are able to assist you with each step of the private limited company registration process.

  • Step 1 - Obtain Digital Signature(DSC).
  • Step 2 - Apply for Director Identification Number (DIN).
  • Step 3 - Reserve Unique name for Company by applying in MCA Portal.
  • Step 4 - File forms with MCA for incorporation.
  • Step 5 - Obtain License of Section 8 Company using INC-12.
  • Step 6 - Obtain Certificate of Incorporation along with PAN and TAN.

Frequently Asked Questions (FAQs)

What is a Section 8 Company?

A Section 8 Company is a not-for-profit entity established to promote art, science, commerce, charity, sports, education, research, or any other useful activity. These companies aim to benefit specific communities or purposes and are exempted from certain provisions of the Companies Act, 2013.

Can a Section 8 Company Make a Profit?

Yes, Section 8 companies can make a profit. They receive subsidies from the government to provide services to low-income individuals and can generate income through various means like investments, donations, and funding.

What is the Difference Between an NGO and a Section 8 Company?

An NGO (Non-Governmental Organization) is independently established and operated for charitable, educational, religious, or social purposes. While NGOs are usually non-profit, Section 8 Companies are non-profit organizations formed to promote various objectives, including commerce, art, science, and social welfare. Section 8 companies can generate profits but must use them for their defined goals, not for member benefits.

How many people are required to register a Section 8 Company?

A minimum of two individuals is required to register a Section 8 company in India.

What are the requirements to be a Director?

The Director must be over 18 years of age and a natural person. There are no restrictions based on citizenship or residency, allowing even foreign nationals to become Directors in an Indian Section 8 Company.

Is a physical office mandatory to establish a Section 8 Company?

While a formal office space is not mandatory, a registered address within India is essential for the Section 8 Company. This address can be located in commercial, industrial, or residential premises, as long as it serves as the official communication point with the Ministry of Corporate Affairs (MCA).

Do I Need to Be Present In-Person to Incorporate a Section 8 Company?

No, physical presence is not required. All documents can be scanned and emailed to our office. Some documents may need to be couriered.

What Documents are Required for Registration?

Identity proof and address proof for proposed Directors are mandatory. PAN card is required for Indian Nationals. Additionally, the landlord of the registered office must provide a No Objection Certificate, along with their identity and address proof.

How Long Does it Take to Incorporate a Section 8 Company? can incorporate a Section 8 Company in 20-30 days, depending on document submission and government approval speed.

How Long is the Registration of the Company Valid?

Once incorporated, a Section 8 Company remains active as long as annual compliances are met. Failure to comply may lead to dormancy or striking off after a period. Struck-off companies can be revived for up to 20 years.

What is a Digital Signature Certificate (DSC)?

A Digital Signature Certificate establishes the identity of the sender or signee electronically while filing documents online. It is required for all Directors of a proposed Section 8 Company.

What is the Director Identification Number (DIN)?

Director Identification Number is a unique identifier for all existing and proposed Directors of a Company. It is mandatory for all directors and never expires.

Can NRIs/Foreign Nationals be Directors in a Section 8 Company?

Yes, after obtaining a Director Identification Number, NRIs or Foreign Nationals can be Directors. However, at least one Director on the Board must be a Resident Indian.

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