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Section 8 Company Registration
A Section 8 Company in India is a type of non-profit organization (NPO) set up with the objective of promoting social causes, such as education, charity, art, sports, environmental protection, or any other activity that benefits society. Governed by Section 8 of the Companies Act, 2013, this type of company enjoys certain tax benefits and is unique in that it does not distribute profits to its members. Instead, profits are reinvested back into the company’s objectives, making it ideal for non-commercial ventures with charitable aims.
Characteristics of a Section 8 Company
A Section 8 Company operates as a legal entity similar to other companies under the Companies Act, but with key distinctions:
No Profit Motive
The primary objective of a Section 8 Company is to further social causes, not to make profits.
Tax Exemptions
It qualifies for various tax exemptions and can apply for an 80G and 12A certificate under the Income Tax Act for donor benefits.
Limited Liability
Members’ liability is limited, protecting them from being personally liable for the company’s debts.
Governance Structure
Like any company, it has a structured governing body and must follow corporate compliances, making it more credible than unregistered non-profits.
Steps for Registering a Section 8 Company
The registration of a Section 8 Company is a streamlined process overseen by the Ministry of Corporate Affairs (MCA). The following steps outline the process
1. Obtain Digital Signature Certificates (DSC)
Each director must first obtain a DSC, as all documents for the registration process are submitted online. This can be acquired through government-approved agencies.
2. Apply for Director Identification Numbers (DIN)
Each proposed director also requires a unique DIN. This can be done online when applying for incorporation or separately via the SPICe+ form.
3. Name Approval via SPICe+ Form
Incorporating a Section 8 Company begins with applying for name approval. The name should align with the company’s objectives and must not resemble any other registered entity. Usually, names include words like “Foundation,” “Association,” “Institute,” or “Council.” The SPICe+ form (Simplified Proforma for Incorporating Company Electronically) is used to submit the application to the MCA.
4. Drafting the Memorandum and Articles of Association (MOA and AOA)
The MOA and AOA specify the company’s objectives, rules, and regulations. For Section 8 Companies, the primary objectives in the MOA must align with promoting social welfare, research, or charitable activities. These documents must also specify that any profits will be reinvested in furthering the company’s goals rather than distributed as dividends.
5. Filing the Incorporation Application
The registration application, along with the DSC, DIN, MOA, AOA, and other supporting documents, is submitted through the SPICe+ form. Additional required documents include:
ID proof and address proof of each director
Passport-size photos of each director
Proof of the registered office address, such as an electricity bill, NOC, or rental agreement
6. Issuance of License and Certificate of Incorporation
Once the MCA verifies the application and documents, it issues a license under Section 8, which allows the company to operate as a non-profit organization. Subsequently, the Certificate of Incorporation is issued, officially establishing the company.
Compliance and Post-Registration Requirements
After incorporation, a Section 8 Company must adhere to certain annual compliances, such as filing financial statements, conducting annual general meetings, and maintaining regular accounts. It must also register under the Income Tax Act for tax exemptions and report regularly to the MCA to maintain transparency.
Conclusion
Registering a Section 8 Company is ideal for individuals or groups dedicated to social causes who want to operate with credibility, legal recognition, and tax benefits. The streamlined registration process and compliance requirements provide a structured way to establish a non-profit with substantial benefits for both the company and its beneficiaries.