If you’re passionate about making a positive impact on society and have decided to establish a non-profit organization (NGO), registering it as a Section 8 company could be the perfect option. Section 8 companies, governed by the Companies Act, 2013, are nonprofit organizations that promote social welfare, charity, education, and other charitable objectives. In this article, we will provide a detailed guide on NGO Section 8 company registration, exploring the steps, benefits, and important considerations.
NGO Section 8 Company Registration
Starting your NGO as a Section 8 company offers several advantages, such as tax exemptions and limited liability. The registration process involves several steps that you need to follow diligently to ensure a smooth and successful registration. Let’s dive into the step-by-step process of NGO Section 8 company registration.
1. Understanding the Eligibility Criteria
Before you proceed with the registration, it’s crucial to ensure that your NGO meets the eligibility criteria for a Section 8 company. The main requirements include:
- The primary objective should be to promote charitable activities.
- The profits and income should be utilized for the betterment of society.
- No dividend should be paid to the members.
2. Name Approval
Choosing the right name for your NGO is essential as it reflects your organization’s mission. Ensure that the name is unique and not similar to any existing companies or trademarks. You can check the availability of your preferred name on the Ministry of Corporate Affairs (MCA) website.
3. Drafting Memorandum and Articles of Association (MOA & AOA)
The MOA & AOA outline the objectives and rules of your NGO. It’s essential to draft these documents carefully, clearly stating your organization’s objectives and the manner in which it will be governed.
4. Obtain Digital Signature Certificate (DSC)
To file the registration documents online, you need to obtain a Digital Signature Certificate (DSC) for the authorized signatories. The DSC ensures the authenticity of the documents submitted.
5. Apply for Director Identification Number (DIN)
Every director of the NGO must have a unique Director Identification Number (DIN). You can apply for DIN through the MCA portal by submitting the required documents.
6. Application for License
File the application for a license to operate as a Section 8 company with the Registrar of Companies (ROC). Attach all the necessary documents, including MOA, AOA, and a declaration of compliance.
7. Pay the Requisite Fees
Upon successful submission of the application, pay the prescribed fees as per the Companies Act.
8. Verification and Approval
The Registrar of Companies will verify your application, and if everything is in order, they will issue the Certificate of Incorporation. Congratulations! Your NGO is now officially registered as a Section 8 company.
Benefits of NGO Section 8 Company Registration
Registering your NGO as a Section 8 company offers a range of benefits that can aid your organization in fulfilling its social objectives:
1. Tax Exemptions
NGO Section 8 companies enjoy various tax exemptions, including income tax and property tax benefits. This allows your organization to utilize more funds for its charitable activities.
2. Limited Liability
One significant advantage of forming a Section 8 company is that the liability of its members is limited. In case of any debts or legal issues, the personal assets of the members are protected.
3. Perpetual Existence
Unlike some other forms of organizations, Section 8 companies enjoy perpetual existence. The organization’s activities can continue even if the members change or resign.
4. Credibility and Trust
Being registered as a Section 8 company enhances your NGO’s credibility and trustworthiness. This, in turn, can attract more donors and supporters to contribute to your cause.
5. Greater Recognition
Section 8 companies often receive greater recognition and support from the government and other organizations, which can open up new avenues for collaborations and partnerships.
6. Easy Foreign Funding
Foreign donors and organizations prefer to support registered Section 8 companies due to their transparent and well-governed structure, making it easier for your NGO to receive foreign funding.
FAQs (Frequently Asked Questions)
Can foreign nationals be directors of an NGO Section 8 company?
Yes, foreign nationals can be directors of an NGO Section 8 company. However, at least one director must be a resident of India.
What is the minimum number of directors required for registration?
You need a minimum of two directors for NGO Section 8 company registration. The maximum number can go up to fifteen.
Is it mandatory for Section 8 companies to appoint an auditor?
Yes, all Section 8 companies are required to appoint an auditor within thirty days of incorporation.
Can a Section 8 company alter its objectives?
Yes, a Section 8 company can alter its objectives, but the alteration must be approved by the Central Government.
Can the profits earned by a Section 8 company be distributed among its members?
No, Section 8 companies cannot distribute profits among its members. The profits must be used for promoting charitable activities only.
Can a Section 8 company be converted into a for-profit company?
No, a Section 8 company cannot be converted into a for-profit company. Its assets and income must be used solely for charitable purposes.
Registering your NGO as a Section 8 company is an excellent way to establish a credible and legally compliant organization focused on making a positive impact on society. Through this guide, we have covered the essential steps, benefits, and FAQs related to NGO Section 8 company registration. By following the correct procedures and adhering to the legal requirements, you can set up your Section 8 company and contribute to the betterment of the community and the world.