Section 8 Company Registration – An Overview
A Section 8 Company is a type of non-profit organization that is registered under the Companies Act, 2013. It is primarily established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or any other beneficial objectives. Section 8 Company registration is quite similar to that of a regular company, but there are some differences in the requirements and processes involved. For instance, Section 8 Companies are not required to use the word “Limited” or “Private Limited” in their names. Additionally, they must have a minimum of two directors and two shareholders, but there is no minimum capital requirement. The main advantage of registering as a Section 8 Company is that they enjoy tax exemptions, and their surplus funds are used only for promoting their stated objectives. Overall, the process of Section 8 Company registration is an excellent way to establish a non-profit organization that can make a significant impact on society.
Benefits of Section 8 Company Registration
Section 8 Company Registration offers a plethora of benefits for non-profit organizations looking to establish themselves. Here are some of the benefits of Section 8 Company Registration:
- Tax Exemptions: Section 8 Companies enjoy tax exemptions under the Income Tax Act, making it easier for them to carry out their charitable or social activities without worrying about the financial burden of taxes.
- Limited Liability: Members of a Section 8 Company have limited liability, meaning that their personal assets are not at risk if the company were to face any legal or financial issues.
- Brand Recognition: Being registered as a Section 8 Company lends credibility and authenticity to the organization, making it easier for them to gain recognition and support from donors, partners, and the public.
- Access to Grants and Funding: Section 8 Companies are eligible to receive funding and grants from the government, international organizations, and other non-profit institutions, which can be used to further their stated objectives.
- Perpetual Existence: Section 8 Companies have perpetual existence, meaning that they can continue to operate even if the original members or directors leave the organization.
- Flexible Governance: Section 8 Companies can have a flexible governance structure, allowing them to operate efficiently while also adhering to legal and regulatory requirements.
- Charitable and Social Impact: The primary objective of a Section 8 Company is to promote charitable or social objectives, allowing them to make a positive impact on society and contribute to the greater good.
Donations/Funding of Sec 8 Company
Section 8 Companies are established for charitable or social purposes, and as such, they rely heavily on donations and funding to achieve their objectives. These donations can come from a variety of sources, including individuals, corporations, and the government. One of the key advantages of Section 8 Company registration is that it makes it easier for these organizations to access funding and grants from various sources. For instance, Section 8 Companies are eligible to receive funding from the government, both at the state and central levels, through various schemes and programs. Additionally, they can also receive funding from international organizations and non-profit institutions that are aligned with their stated objectives. Individual donors and corporate entities can also donate to Section 8 Companies and receive tax exemptions on their contributions, making it a win-win situation for both parties. It is essential for Section 8 Companies to maintain transparency and accountability when it comes to their donations and funding, as it helps build trust and credibility among their stakeholders. Overall, donations and funding are critical for the success and sustainability of Section 8 Companies, and they play a vital role in enabling these organizations to make a positive impact on society.
Requirements for Online Registration of Sec 8 companies
The process of online registration for a Section 8 Company is straightforward and can be completed from the comfort of your home or office. Here are some of the requirements for online registration of a Section 8 Company:
- Digital Signature Certificate: The first step in online registration is to obtain a Digital Signature Certificate (DSC) for all the proposed directors and shareholders of the company. A DSC is an electronic form of a signature, which is used to sign and submit the online registration documents.
- Director Identification Number: All proposed directors of the Section 8 Company must obtain a Director Identification Number (DIN) from the Ministry of Corporate Affairs (MCA).
- Name Reservation: The next step is to apply for name reservation of the Section 8 Company. The proposed name of the company must be unique and not already registered with the MCA. The name can be reserved for a period of 20 days.
- MOA and AOA: The Memorandum of Association (MOA) and Articles of Association (AOA) of the Section 8 Company must be drafted and submitted online. These documents outline the objectives, rules, and regulations of the company.
- PAN and TAN: The Section 8 Company must obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.
- Registration Fees: The final step is to pay the registration fees online, which is based on the authorized capital of the company.
Name Approval of Section 8 Company Registration
The Ministry of Corporate Affairs (MCA) has set specific guidelines and regulations that must be adhered to when proposing a name for a Section 8 Company. The name of the company should align with its objectives and must not be identical or too similar to an existing company’s name. Additionally, it is imperative to ensure that the proposed name does not violate any provisions of the Emblems and Names (Prevention of Improper Use) Act, 1950. To apply for name approval, the MCA has introduced an online platform called “RUN” (Reserve Unique Name). The applicant is required to provide up to two alternative names in case the primary name is not available. Once the name is approved, it is reserved for a period of 20 days, during which the applicant must complete the remaining registration formalities and submit the necessary documents. If the registration is not completed within 20 days, the name reservation will expire, and the applicant will have to reapply for name approval. Hence, it is crucial to choose a name that aligns with the objectives of the organization and is compliant with the MCA’s regulations to avoid any delays in the registration process.
Sec 8 Company Registration Eligibility Criteria
To be eligible for Sec 8 Company registration, the applicant must be a person or a group of individuals who intend to form a non-profit organization for the promotion of art, science, commerce, charity, or any other useful purpose. The company must have a minimum of two directors, and at least one of them must be an Indian resident. Additionally, the company’s proposed objective must align with the Sec 8 Company provisions, which require the company to use its profits or income towards promoting the objectives of the organization and not distribute it among the members. The company must also have a registered office address in India, which should be submitted during the registration process. Lastly, the company must obtain the necessary licenses and permits required for its operations, if any, and submit them during the registration process. These eligibility criteria are set to ensure that only those who intend to form non-profit organizations for the betterment of society can register as a Sec 8 Company, and it is important to comply with these criteria to ensure a smooth registration process.
Documents Required for Registration of Section 8 Company
The registration of a Section 8 Company involves the submission of several documents, which are necessary to verify the identity of the company and its directors, along with their eligibility to form the company. The documents required for registration include the Memorandum of Association (MoA) and Articles of Association (AoA), which outline the company’s objectives, rules, and regulations. The directors must also submit their identity proof, such as Aadhaar card or passport, along with their address proof, which can be a utility bill or a bank statement. The company’s registered office address proof must also be submitted, which can be a rental agreement or a property tax receipt. Additionally, a declaration stating that the company intends to operate as a non-profit organization and use its profits or income towards promoting the objectives of the organization must also be submitted. If any licenses or permits are required for the company’s operations, they must also be submitted during the registration process. These documents are crucial to verify the company’s legitimacy and ensure compliance with the regulations set by the Ministry of Corporate Affairs. It is essential to ensure that all the documents are accurate and complete to avoid any delays or rejections in the registration process.
Online Section 8 Company Registration – A Detailed Process
The online registration process for a Section 8 Company involves several steps, which are detailed below:
- Obtain Digital Signature Certificate (DSC): The first step is to obtain a DSC for all the directors of the company, which is necessary for filing the registration documents online.
- Obtain Director Identification Number (DIN): The directors must also obtain a DIN, which is a unique identification number assigned to all directors in India.
- Apply for Name Approval: The applicant must apply for name approval through the MCA’s online platform “RUN” (Reserve Unique Name), providing up to two alternative names in case the primary name is not available.
- Draft Memorandum and Articles of Association (MoA and AoA): The MoA and AoA must be drafted in compliance with the Section 8 Company provisions and uploaded on the MCA portal.
- Obtain License and Permits: If any licenses or permits are required for the company’s operations, they must be obtained and uploaded during the registration process.
- Apply for Incorporation: Once all the above steps are completed, the applicant can apply for incorporation through the MCA’s online platform “SPICe+” (Simplified Proforma for Incorporating Company Electronically Plus).
- Pay the Registration Fees: The applicant must pay the prescribed registration fees through the MCA portal.
- Verification and Approval: The MCA will verify the application and documents submitted and approve the registration if everything is in order.
- Obtain Certificate of Incorporation: Upon approval, the applicant will receive a Certificate of Incorporation, which confirms the formation of the company.
The online registration process for a Section 8 Company is a convenient and hassle-free way to form a non-profit organization. However, it is essential to ensure that all the documents and information submitted are accurate and comply with the regulations set by the Ministry of Corporate Affairs.
Section 8 Company Compliances
Once a Section 8 Company is registered, it is essential to ensure compliance with the regulations and guidelines set by the Ministry of Corporate Affairs (MCA). Some of the mandatory compliances for Section 8 Companies include holding Board and Annual General Meetings, maintaining proper books of accounts, and filing annual returns with the Registrar of Companies (RoC). The financial statements of the company must be audited by a qualified Chartered Accountant, and the audit report must be submitted with the annual returns. The company must also maintain proper records of its transactions, including all receipts and payments. Any changes in the company’s registered office address or directors must be reported to the RoC within a specified period. Non-compliance with the regulations can result in penalties and legal action against the company and its directors. Therefore, it is essential to ensure timely and accurate compliances to avoid any legal issues and maintain the company’s reputation. Seeking the assistance of a professional Chartered Accountant or Company Secretary can help ensure proper compliance and avoid any penalties or legal issues.
FAQs on Section 8 Company Registration Online
1. Can a foreign national or non-resident Indian (NRI) register a Section 8 Company online?
Yes, a foreign national or NRI can register a Section 8 Company online, provided they comply with the eligibility criteria and regulations set by the MCA.
2. Can an existing company be converted into a Section 8 Company, and what is the process for doing so online?
Yes, an existing company can be converted into a Section 8 Company by filing an application with the Regional Director of the MCA. The process involves amending the MOA and AOA of the existing company and complying with other legal requirements.