Section 8 Company Registration

What is Section 8 Company Registration?

A section 8 company is a non-profit organization registered as a company under the companies act 2013. It is basically incorporated for special purposes like the promotion of fine arts, commerce, education, sports, social welfare, culture, literature, knowledge sharing, or similar purposes. The basic purpose of these companies is to carry out non-profit activities and promote charity work. An exclusive license is granted to these types of companies by the government.

What is Section 8 Company Registration Regulations?

Primarily, NGOs are registered under the following laws in India:

1. Trust under Indian Trust Act 1882
2. Society under Societies Registration Act
3. As a company under Section 8 of Company Act 2013. 

So an NGO registered as a company under section 8 is governed by companies act 2013. 

What are the Conditions for a Section 8 Company?

There are some conditions laid down in the law for granting licenses to companies under section 8. These are as follows;

• The company must be registered for charitable purposes.
• All incomes and profits must be used for these purposes.
• The company must not be paying any dividends to its members. 

Who is Eligible for Section 8 Company?

Like all other registrations done under the government, registering a section 8 company also has some prerequisites:
•    Any Indian national of Hindu Undivided Family (HUF) can incorporate a section 8 company. 
•    The company must have at least two directors.
•    At least one director should be a resident of India. 
•    The company's primary goal shall be to promote fine arts, commerce, education, sports, social welfare, culture, and so on. 
•    All profits and surplus income generated must be used to promote charitable activities as prescribed. 
•    Founders and members are not entitled to a salary or other remuneration. 
•    Profits shall not be distributed among members.

What Does a Section 8 Company Do?

A section 8 company is an NGO that is registered as a company under the Companies Act of 2013. It was established for charitable purposes and to promote non-profit activities such as sports, art and culture, education, research, social welfare, religion, environmental protection, and so on. It is governed by the Ministry of Corporate Affairs, whereas other NGOs registered as trust or society etc. are governed by the Registrar of Societies under state government. When compared to trusts and societies, registering an NGO as a company has numerous advantages. It enjoys greater credibility among donors, government agencies, and the general public. 

What are the Benefits Available to Section 8 company?

There are numerous benefits of registering an NGO as a section 8 company. Few of them are listed below:

• No Minimum Capital Requirement: There is no minimum capital required for incorporating a company under section 8. Thus a company can be formed earlier and capital can be arranged later via donations, subscriptions etc.
• No Tax Compliance: Section 8 companies enjoy 100% tax exemption as their profits are used for charitable purposes.
• Limited Liability: The members of Section 8 company have limited liability and are not personally liable for the company’s losses.
• No Stamp Duty Required: Registration of company under section 8 does not require any stamp duty
• Credibility: Section 8 companies are seen as more credible than other charitable organizations due to legal compliance and mandatory annual audits.
• Tax Exemption to Donors: Persons donating to Section 8 companies are exempted from tax under 80G.

What are the Documents Required for Section 8 company?

Registering a Section 8 company is a tiresome process, and many documents and huge paperwork is required. Below is a list of documents needed:

• Article of Association (AoA)& Memorandum of Association (MoA)
• Proof of office address
• The company's objectives and proposed work
• Personal documents of the director/s, such as identification and proof of residence
• Statements of financial position
• Nominees and subscribers must provide proof of residence and identity.
• Digital signature certificate (DSC)
• Director identification number (DIN)
• A copy of the certificate of incorporation
• SPICE+ form for application for incorporation

What is Section 8 Company Registration Process?

1. Obtain a Certificate of Digital Signature.
2. Obtain the Director Identification Number (DIN).
3. Reserve a unique name for the company. For this, a Reserve Unique Name(RUN) form is filled. A section 8 company registration must have names like federation, foundation, society, council, institute etc. 
4. File the application for incorporation via INC 32
5. Filing SPICe+ form: this is the final stage for section 8 company registration. SPICe+ form is submitted along with the required attachments. Once it is approved, a certificate of incorporation along with the Company Identification Number(CIN) is issued. 

What is Section 8 Company Registration Compliances?

Like any other company, section 8 company also has to comply with various guidelines given below:

1. Filing of income tax
2. Preparation of financial statement
3. Maintenance of account books
4. Mandatory audit report 
5. CSR compliances and activities 

What is the Penalty for Section 8 Company?

There are certain penal provisions if there is any non-compliance found in the operations of companies registered under section 8. If a company or firm is found to be violating the rules and criteria for section 8 company, a hefty fine can be imposed by the government, and registration can be revoked as well.

What is Section 8 Company Registration Assist?

What is Section 8 Company Registration Fees?

Are you looking for Section 8 Company Registration Fees then here the details for you. The Section 8 Company Registration cost start from ₹3500 to ₹10000 along with Government Fee ₹2500 and Professional Fee ₹1000.

FAQs