COMPLETE PROCESS OF REGISTRATION OF SECTION 8 COMPANY
|DOCUMENTS|PROCEDURE|REQUIREMENTS

INTRODUCTION:

In India, a non-profit organization or a non-governmental organization is of three types, such as, Trust, Society, and Section 8 Company. Section 8 Company is one of the most well-known forms of non-profit or non-governmental organizations.

According to Section 8 of the Companies Act, 2013, a company or a corporate entity is referred to as a Section 8 Company. Such a company is registered as a limited company.

A Section 8 company works for the promotion of non-profit objectives, as in, the promotion of-

  • education, 
  • arts, 
  • science, 
  • research, 
  • sports, 
  • religion, 
  • social welfare,
  • protection of environment or other related work etc.

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Every entity/organization registered under Section 8 of the Company Act is a non-profit organization, which utilizes its profits towards the objectives promoted by such entity/organization.

Prior to the registration of a Section 8 Company, the following things should be kept in mind:

  • For getting the License of the company, the applicant should apply for it to the Ministry of Corporate Affairs (MCA).
  • Minimum 2 directors in case of private and three directors for a Public Limited Company.
  • Among all the directors, at least one director must be a resident of India.
  • The initial capital for the company must be invested within two months of the formation of the Company.
  • The ownership of the company lies in the name of the company, and it can be sold as per the rules specified under the Company Act, 2013.
  • The company should be registered as a company limited by shares or guarantee, not with unlimited liability.
  • The company should not amalgamate with a company that is not a Section 8 Company.
  • In every sixth month, there should be at least one meeting.
  • All the directors should have their valid Director’s Identification Number (DIN) and Digital Signature Certificate (DSC).
  • There should be no proxy by the members.
  • There must be the annual filing of accounts, statements, and returns of the company with the ROC, for the purpose of adhering to the set compliances.
  • After the dissolution of a Section 8 company and after settling all debts and liabilities, the funds or property of the company are not distributed among the members of the company, and rather it is given to some other Section 8 Company, which has a similar object. A Section 8 Company can wind up by following the by-laws of the society. 

Documents required for registration of Section 8 Company:

  1. Article of Association
    1. Memorandum of Association
    1. Declaration by the Directors and Subscribers
    1. Confirmation regarding the address of the Company 
    1. Photocopy of two month’s utility bill
    1. Nominees assent
    1. Identity proof of the nominees and the subscribers
    1. Identity proof of the applicants
    1. A declaration or resolution of the unregistered company
    1. Digital Signature Certificate (DSC)
    1. Any other related document if needed.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

COMPLETE PROCEDURE FOR REGISTRATION OF A SECTION 8 COMPANY:

An applicant needs to go through the below-mentioned stages for registration of a Section 8 Company-

APPLY FOR A DIGITAL SIGNATURE CERTIFICATE (“DSC”): For registration of Section 8 Company, the first thing to do is, to apply for a Digital Signature Certificate (DSC) of the proposed directors and shareholders. A Digital Signature Certificate (DSC) is used for affixing the signatures in the E-forms related to the incorporation of the company.

PROPOSED NAME RESERVATION THROUGH SPICE+: Any company incorporated with effect from 23.02.2020, is required to make an application for reservation of name and incorporation through the SPICe+ form placed under the Ministry of Corporate Affairs (MCA) portal. The name of the company may be reserved in Part A of SPICe+. In case the applicant wants to apply for name, incorporation, and other integrated services together, he/she can do so by filling in the necessary information in Part A and Part B. For a change of name, web service RUN (Reserve Unique Name) is required to be submitted.

For the purpose of name reservation, it is noted that the proposed name of the company shall include words like-

  1. Association
  2. Council
  3. Chamber
  4. Confederation
  5. Federation
  6. Foundation
  7. Forum and the like, etc.
  8. Submission of SPICe+ Part A form

The applicant has to submit the SPICe+ Part A form for Name reservation and incorporation purposes. DIN Application is also included in the SPICE+ form.

Filing of SPICe+ Part B form for incorporation purpose

After submission of the SPICe+ Part A form, the next step is to download the SPICe+ Part B form in PDF format. For filling the related forms are: –

  1. SPICe+AoA,
  2. SPICe+MoA,
  3. AGILE-PRO,
  4. INC-9 and URC-1 and for affixing the “DSC”.

Preparing AoA and MoA

After the completion of the filing of the SPICe+ form, the applicant has to do the filing of the Articles of Association (AoA) and the Memorandum of Association (MoA) from the dashboard link. AoA is a document that regulates the internal management of the company and MoA is the charter of the company which defines the scope of its activities.

MoA of Section 8 Company should be in form INC-13, but there is no such format for AoA of Section 8 Company. AoA&MoA of the company shall be signed by each subscriber who shall mention his name, address, description, occupation, etc., in the presence of at least one witness who shall attest the Digital Signature Certificate and shall likewise sign. 

Filing details in the AGILE-PRO Form

After preparation of AoA and MoA, the next thing to do is to fill the details in the AGILE-PRO Form. Recently the portal of the Ministry of Corporate Affairs (MCA) has launched an e-form named AGILE-PRO Form. 

AGILE-PRO Form includes-

i. Goods and Service Tax Identification Number (GSTIN)- this is optional.

ii. Employees Provident Fund Organisation (EPFO) or Employees’ State Insurance Corporation(ESIC) – it is mandatory to apply for ESIC and EPFO.

iii. Bank Account- opening a bank account through this form.

Filing the details in the INC-9

To get the declaration by the director or subscriber, an applicant has to file the essential details in the Inc-9. 

Filing of forms with MCA

An applicant has to file all the forms under the portal of MCA. After successful submission, the documents can be submitted, and Digital Signature Certificate (DSC) can be affixed in such respective form. 

Scrutiny checks and fees payment

After the completion of the successful completion of all the above-mentioned steps, an applicant must not forget to do a pre-scrutiny check, after which the applicant submits by clicking on the submit button. The applicant has to pay a certain amount for registration of Section 8 Company.

Certificate of Incorporation

Once the Registrar finds the documents and information accurate, he then issues the Certificate of Incorporation (COI) to the said company.

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This is how a Section 8 Company gets registered under the said Act.

ANNUAL COMPLIANCES WHICH ARE REQUIRED TO BE MADE:

Any company registered under Section 8 of the Company Act, 2013 is required to make the following compliances annually:

a. Two compulsory Board Meetings in a year,

b. Compulsory Audit,

c. Preservation of the Books of Accounts,

d. Compulsory filing of Income Tax return,

e. Filing of Form AOC-4 and Form MGT-7,

f. Registering for 12AB,

g. Adoption of Financial Statements etc.

In case of non-compliance of any of the legal provisions specified under Section 8 of this Act, a Section 8 Company will face the following consequences:

a) Central Government may revoke the License issued to the said company.

b) In case of revocation, the company may get wound up.

c) In case of default in compliance with the provisions of this Act, the said company shall be punished with a fine, which shall not be less than INR 10 Lakh and may extend upto Rs.1 Crore. The Directors and other officers of the said company shall be punishable with imprisonment, which may extend upto three years, or fine INR 25,000 or more, or both. 

ADVANTAGES/BENEFITS OF SECTION 8 COMPANY REGISTRATION:

Registration of a Section 8 Company has some benefits, which are as follows-

1)  Legal Entity-

A company registered under Section 8 of the Company Act, 2013 gets its distinct legal entity, and it has a separate legal personality unlikely its members. 

2)  Tax Benefits-

In India, a Section 8 company avails many tax benefits. Different kinds of tax exemptions and compensations are provided to the said Section 8 Company and to the donors and/or subscribers of the company as well.

3)  Stamp Duty-

For a Section 8 Company, there is zero stamp duty needed. The company is exempted from paying any stamp duty at the time of registration.

4)  Credibility-

In comparison with any other charitable organization, a Section 8 Company has more credibility.

5)  Capital Criteria-

In a Section 8 Company, there are no minimum capital criteria. This type of company can be formed even without any share capital.

6)  Name-

A Section 8 Company does not need to add any kind of suffix, such as ‘Public Limited’ or ‘Private Limited’, to its name.

7)  Tax exemption to the Donors-

Persons donating to a Section 8 Company are eligible for tax exemption under Section 12A and Section 80G of the Income Tax Act.

Conclusion:

Being a non-profit organization, a Section 8 Company is a Company created by those who do not earn profit from their venture, rather their goal is to dedicate themselves so much so that they can improve and work for the welfare of a section of the society by lending hand to the needy people.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.