Overview of Section 8 Company and its Registration in India

Section 8 company is licensed as a non-profit organization under the Companies Act, 2013. Section 8 companies are registered when their purpose is to promote arts, commerce, education, social welfare, or any other income obtained to promote objectives. To register section 8 companies, you need to pick a unique name, follow the process, and apply for a section 8 company registration. Once license approved, you officially form the company and can get benefits like tax exemptions under the Income Tax Act.

What is a Section 8 Company?

When a company gets registered under Section 8 of the companies act with the charitable purpose, then such entity is known as Section 8 Company. Such companies are considered as corporate bodies which are a type of non-government organization. Such entities can have various benefits of the government as they are working for the benefit of society, the government provides them with a number of advantages. They are separate legal entities which are having limited liability.

Key Points Regarding Section 8 Company under Companies Act

Some of the key points with respect to such entities are discussed below:

• Non-Profit: Such entities are formed with the charitable purpose, hence their motive must be non profitable.
• License Requirement: Section 8 companies need to be registered under the company law with the help of MCA because without getting required registration license or certificate of incorporation they cannot work.
• Naming Convention: The company’s name must end with words like "Foundation," "Association," or "Trust."
• Tax Benefits: Enjoy tax exemptions on income from charitable activities and donations and for getting such tax benefits they need to get 80G and 12A registration. Without getting such registration under the Income Tax Act, section 8 companies cannot get tax benefits.
• Regulatory Approval: All the regulatory approvals must be obtained timely and in the prescribed manner.
• Profit Utilization: Profits must be utilized solely for promoting the company's objectives, because they cannot be used for any kind of non profit activities.
• Compliance: just like the other corporate entities they also need to comply with all the compliances prescribed for them under the Companies Act.
• Winding Up: Approval from the Central Government is necessary for dissolution, and assets must be transferred to similar charitable entities.

Benefits of Registration of Section 8 Company in India

Some of the key benefits of registration of the company under section 8 of company law in India are:

• Recognition: Legal recognition under the Companies Act has come with the registration of the company under section 8 of company law.
• Tax Exemptions: Non-profit status comes with the section 8 companies which helps them to obtain various types of tax exemptions under the taxation law of India.
• Separate Legal Entity: Limited liability for members as well as directors of the company which means the company is responsible for itself and having a separate legal entity.
• Perpetual Succession: Perpetual existence makes the company more reliable as well as credible in the market. Perpetual succession means never ending. This indicates that existence of such entities is never ending until they are dissolved with the proper process of the law.
• Funding: Access to funds, donations as well as investors becomes easy as after getting registered as a corporate entity they become more reliable and transparent and their trustworthiness increases.
• Create Social Impact: Ability to make a social impact in various sectors as their primary work is related to the charity.
• Credibility: Helps in the business growth and development by simply enhancing credibility and trust among stakeholders.
• Compliance Regulations: Corporate structure with a board of directors which simplified compliance requirements which ultimately increases the opportunities for collaboration and partnerships.
• No Minimum Capital: There's no prescribed minimum capital requirement for incorporation of such companies.

Key Requirements of Section 8 Company Registration in India

In order to incorporate a section 8 company in India you need to have the following:

• Directors: Minimum of two directors, with at least one being an Indian resident.
• Members: Minimum of two members required, with no upper limit.
• Registered Office: Must have a registered office address in India.
• Certificate of Registration: Submit an application for a license to the Central Government through MCA because they need a CIN in order to work freely in the market.
• Objective Statement: Clearly state charitable objectives in the memorandum of association.
• Memorandum and Articles: Drafting of proper MOA as well as AOA is necessary for the registration of the company under section 8 of company law in India.
• Declaration by Directors: A declaration must be made by the directors of the company in order to declare that the directors are eligible as well as willing to work as the directors of the company. .
• Proof of Identity and Address: Provide valid identification as well as address proofs for directors and members of the company.
• NO Objection Certificate (NOC): Obtain NOC for names similar to existing trademarks or companies if it is required to be taken.
• Regulatory Fee: Pay prescribed fees for incorporation and regulatory filings and obtain acknowledgement

Who is Eligible to get Section 8 Company Registration?

Individual as well as organization who will fall under the mentioned below eligibility criteria can register a Section 8 Company in India:

• One who is thinking about starting a company with non-profitable or charitable objectives.
• Having a minimum number of members required for the registration of the company under section 8 of company law.
• Must have a registered office address in India.
• Having the minimum number of Board of Directors i.e BOD.
• When the company intends to support research, business, education, arts, sports, science, religion, charity, health, environmental protection or other objectives;
• When the company intends to invest all its profits or other income after its establishment solely in the promotion of such products.

What are the Fees for Section 8 company?

The registration fees for Section 8 companies in India:

• DSC & DIN: Approximately Rs. 3,000
• Company Name Reservation: Around Rs. 1,000
• MOA, AOA, Government, and Incorporation fees: Rs. 6,000-8,000*
• Notary and Stamps: Approximately Rs. 2,000
• Professional Fees: Rs. 6,000-9,000*

Documents Required for the Registration of Section 8 Company

List of key paperwork required for the registration of mentioned company is discussed below:

• Memorandum of Association (MoA) outlining company’s objectives.
• Articles of Association (AoA) detailing internal rules.
• Identity, address, and residential proofs of directors and members.
• Registered office address proof.
• Declaration and NOC from directors and members.
• Affidavit of directors' eligibility.
• Proof of ownership or permission for office premises.
• Financial statements certified by a Chartered Accountant.
• License under Section 8 of Companies Act.
• Duly filled INC-12 Form for license application.
• Power of Attorney if submitted by someone other than directors.

Process of Registration of Section 8 Company in India

Follow the steps given below in order to do registration of the company under section 8 of company law in India:

• Obtain Digital Signature Certificate (DSC)

The first step is to obtain a Digital Signature Certificate (DSC) for the proposed directors of the Section 8 Company.

Forms to be used: DIR-3, DSC

• Obtain Director Identification Number (DIN)

After obtaining the DSC, the next step is to apply for a Director Identification Number (DIN) for the proposed directors.

Forms to be used: DIR-3

• Check the Eligibility

to register a section 8 company in India as per the company law, it is necessary that you are eligible to register. Hence it is very important to check the eligibility criteria before starting with the registration process or we can say that in order to register such a charitable organization the very first step is to check the eligibility. If you as an individual or an organization is not eligible to register such an entity then your application is going to be rejected, thus in order to save your time as well as efforts make sure to check the eligibility criteria properly.

• Collect All the Required Documents

Without submitting the proper paperwork one cannot successfully register the section 8 company under the company laws of India. Hence make sure to have all the documents on your desk before you actually start the registration process of such a company. Documents are important because they are helping the government to get some information which is required by them to give you permission to work as a charitable organization. If any document is missing then authorities will raise the clarification about the same. Without completing all the documentation it is not possible to register such corporate bodies.

• Choose a Good Name

In the present times hundreds of businesses are already existing in the market and in such scenarios it's not a big deal that your company's name may be similar to an already existing entity in the market. Hence in order to avoid any such situation make sure to choose the name of the entity after doing proper research of the market. In case you want to take a particular name but you find that it is already existing in the market then you can try to obtain a NOC from them. If they agree to provide you an NOC then you can take that name otherwise you cannot.

• Take Name Approval

Only choosing a good name is not sufficient but after choosing a good name for your entity you need to take approval for such a name from the government through MCA. This is an intrinsic part of the registration process of section 8 companies under the companies act. Only after completing this step one can move forward with the further registration process. Once the approval of the name is given then you have twenty one days in which you have to complete the further registration process. If you didn't complete the further process in the stipulated time duration then you have to extend that time duration after paying the extra fees.

• Filing of Application

After completing the above step now you have to move forward with the further process which includes filing of Spice+Part B Form. This is the main process of registration of Section 8 Companies in India. This is a multi step process through which you have to file different forms with different information before the MCA. Make sure to complete this form with extra care and caution. After completing the form ensure to check it twice before submitting it before the MCA.

• Payment of Fees

Payment of fees and obtaining the acknowledgement is also equally important hence must do the same in the prescribed manner. Here we are not quoting the required fees for the registration of section 8 companies because it may vary state to state also it includes various hidden charges like professionals fees, DSC fees etc.

• Examination of the Application

Once you complete all the above steps now it's time for the department to check your application. Here the department basically evaluates whether all the documents submitted by you are proper and correct or not. If they find any glitch with the documents then they will raise the query about the same which must be resolved by the applicant in the prescribed time. If such clarification is not resolved within the prescribed time then your application will be rejected. In case they find your application all right with no further change then they will approve your application.

• Obtain Certificate of Incorporation

Once you complete the Spice+ Part B form and the department will approve your application then within a few days you will get the certificate of Incorporation through mail. This certification is also called CIN.

Forms Required for Registration of Section 8 Company

There are number of forms which are directly or indirectly related with the registration of the company under section 8 of company law, out of which some are mentioned below:

• Form INC-1: Name reservation application.
• Form INC-7: Declaration of compliance.
• Form INC-22: Registered office notice.
• Form DIR-12: Director appointment particulars.
• Form DIR-2: Director consent.
• Form INC-8: Declaration by a professional.
• Form INC-9: Subscriber declaration.
• Form INC-10: Director intent declaration.
• Form RD-1: Conversion application.
• Form RD-4: Dormant status application.
• Form RD-6: Fast Track Exit application.
• Form RD-18: License application.
• Form RD-19: Registered office shift application.
• Form RD-20: Director increases application.
• Form RD-GNL-5: Name change approval application.

Annual Compliances for Section 8 company

1. Annual General Meeting (AGM)

Within six months from the end of the financial year.

2. Board Meetings

At least one meeting in every six calendar months and a minimum of two board meetings in a year.

3. Annual Return (Form MGT-7)

Within 60 days from the date of the AGM.

4. Financial Statements (Form AOC-4)

Within 30 days from the date of the AGM.

5. Income Tax Return

By 30th September of the assessment year.

6. Director’s Report

It should contain details about the company’s performance, financial position, and other significant activities during the financial year. This report is presented at the AGM.

7. Statutory Audit

The financial statements must be audited by a qualified Chartered Accountant.

8. Maintenance of Statutory Registers

Registers like Register of Members, Register of Directors, Register of Charges, and others as required under the Companies Act, 2013, must be maintained and updated regularly.

9. Compliance Certificate

• Form DIR-8: Every director of the company must file this form confirming that they are not disqualified to act as a director.
• Form MBP-1: Every director must disclose their interest in other entities annually.

10. Donations and Funding Disclosure

Disclose all donations received and their utilization in the annual financial statements.

11. CSR Activities

If applicable, disclose the details of Corporate Social Responsibility (CSR) activities undertaken during the financial year.

12. Maintenance of Books of Accounts

Maintain proper books of accounts at the registered office of the company.

13. Filing of Resolutions and Agreements (Form MGT-14)

If the company passes any resolutions or enters into agreements, they must be filed with the Registrar of Companies within 30 days.

14. Compliance with RBI Guidelines (if applicable)

If the Section 8 company is involved in activities that are regulated by the Reserve Bank of India (RBI), additional compliances as per RBI guidelines must be adhered to.

15. Declaration of Commencement of Business (Form INC-20A)

To be filed within 180 days of incorporation if the company has been incorporated after the commencement of the Companies (Amendment) Ordinance, 2018.

Penalties for Non-Compliance

Non-compliance with these requirements can result in penalties, fines, and other legal actions against the company and its directors.

Why to Choose Whizseed for the Registration of Section 8 Company?

Registration of the company under section 8 of company law is not merely a sign that the legal entity has been established. It is the beginning of the road to social change. Individuals and companies can pave the way for a profitable and profitable business by following strict rules and meetups should be there. As these entities' overcome the challenge of registration, they begin to work effectively to support communities, promote new ideas, and create a long life of compassion and social responsibility. Through their efforts, Section 8 companies maintain the spirit of sacrifice and become beacons of hope in the world striving for positive change. Some of the key benefits due to which you should choose Whizseed for the registration of the company under section 8 of company law are:

• Expert guidance for seamless registration.
• Streamlined processes save time.
• Tailored solutions to meet your needs.
• Dedicated support from experienced professionals.
• Transparent pricing with no hidden costs.
• Comprehensive services beyond registration.
• Proven track record of success.
• Tech-enabled platform for efficiency.
• Positive reviews by the service takers.
• Long-term collaboration for ongoing support.