Section 8 Company Registration
Section 8 Company Registration
A company is referred to as a “Section 8” company when it is registered as a non-profit organization (NPO), i.e., when it has the motive of promoting arts, commerce, education, charity, protection of the environment, sports, science, research, social welfare, and religion. The income of an NPO cannot be used for paying out dividends to the company’s members and has to be for the promotion of charitable objectives. Such companies obtain an incorporation certificate from the central government and are liable to adhere to the rules specified by the government.
Definition of Section 8 Company – Companies Act, 2013
A Section 8 company is one whose goals are to promote the arts, commerce, science, research, education, sports, charity, social welfare, religion, environmental protection, or other similar goals, according to the Companies Act. These organization similarly devote their profits to furthering their mission and do not pay dividends to their shareholders.
Section 8 Company – Old Section 25 Company
These businesses were formerly defined under Section 25 of the Companies Act of 1956, which had similar provisions. The new Act, on the other hand, specifies that Section 8 businesses can have multiple objectives.
Features of Section 8 companies
A Section 8 company registration has the following distinguishing characteristics that most other types of businesses lack:
Charitable objective:
Section 8 firms have charitable goals and do not seek to generate a profit. Their motivations are entirely benevolent. They work to further issues such as science, culture, research, sports, and religion, among others.
No minimum share capital:
Section 8 corporations, unlike all other corporations, are exempt from having to have a minimum paid-up share capital.
Limited liability:
Members of these corporations can only be held liable to a certain extent. In any event, their liabilities cannot be endless.
Government license:
These businesses can only operate if they receive a license from the federal government. This license can also be revoked by the government.
Privileges:
Because these businesses have charity goals, the Companies Act provides them with a number of perks and exemptions.
Firms as members:
Section 8 allows firms to join these entities in addition to individuals and groups of people.
Formation of Section 8 company
Under Section 8 of the Companies Act, a person or a group of people can apply to the Registrar of Companies with the necessary forms to incorporate a charitable corporation. If satisfied, the Central Government can accept such an application on any terms and conditions set by the license it has granted. After the company has been accepted, the Registrar of Companies will register it after the applicants have paid all of the required costs.
It’s crucial to keep in mind that such businesses can only be limited. In this circumstance, all limited company advantages and liabilities apply. Furthermore, unlike all other corporations, these ones do not have to include the terms “Limited” or “Private Limited” in their names.
Because such firms’ existence is predicated on the license granted to them, they are unable to change their memorandum or articles of the organization without the authorization of the Central Government. They also aren’t allowed to do anything that the license forbids.
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Eligibility to apply for section 8 companies
If an individual or group of individuals has the following purposes or goals, they are entitled to register as a Section 8 Company. The goals must be confirmed to the satisfaction of the government at large.
- When a business wants to promote science, commerce, education, art, sports, research, religion, charity, social welfare, environmental preservation, or similar goals
- When the company intends to use all profits (if any) or any income earned after formation solely for the promotion of such purposes
- When a firm decides not to pay a dividend to its shareholders.
Documents Required for Section 8 Company Registration
- Digital Signature Certificate
- Memorandum of Association
- Articles of Association
- Passport Size Photographs
- Members’ Id Proof such as Aadhar Card, Passport, Voter Id
- Details of Director (When the Members Are Other Companies/LLPs)
- Address Evidence
- Director Identification Number
Section 8 Company Registration Procedure
The procedure for forming a Section 8 corporation is as follows:
Step 1- Obtain a Digital Signature Certificate of the proposed Section 8 Company Directors. After receiving a DSC, submit Form DIR-3 to the ROC to obtain a DIN. To get a DSC, you’ll need to attach proof of identity and proof of address.
Step 2 – After the DIR-3 has been authorized, the ROC will assign the prospective directors a DIN.
Step 3 – Submit Form INC-12 (application for license) to the ROC in order to apply for a Section 8 company license, together with the needed documentation listed above.
Form_INC-12Step 4 – After the form has been approved, a section 8 license will be issued in Form INC-16(license to incorporate as section 8 company).
inc-16Step 5 – Once you get your license, submit the SPICe+ Form to the ROC for incorporation, along with the relevant attachments.
If the ROC is happy with the information provided on the forms, he will issue a Certificate of Incorporation and a unique Company Identification Number (CIN).
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