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Section 8 Company

Take the first step towards establishing your Section 8 company today and make a lasting difference in society. Get started now!
section-8-company-registration

    Registering a Section 8 company in India is an ideal choice for individuals and organizations looking to make a significant social impact.

    Remember to consult with Tax Mother and stay updated with the latest regulations to ensure a smooth and successful journey in running a Section 8 company.

    Section 8 Company Registration

    Learn the step-by-step process of registering a Section 8 company and make a positive social impact today!

    Section 8 companies are registered to promote various fields such as art, science, education, social welfare, and environmental protection. Once registered, these companies can operate nationwide. There are three ways to register an NGO in India: as a Section 8 company, a trust under the Trust Act 1882, or a society under the Societies Act 1860.

    Eligibility to Apply for a Section 8 Company

    To be eligible for registering a Section 8 company, individuals, Hindu Undivided Families (HUFs), or limited companies must fulfill certain criteria:
    1. Individuals, HUFs, or limited companies can establish a Section 8 company.
    2. Shareholders and directors must fulfill all requirements and compliances for Section 8 company registration.
    3. At least one director must be a resident of India, while a firm can also become a member of the company.
    4. The company’s objectives should include promoting sports, social welfare, science and art advancement, education, and financial assistance to the underprivileged.
    5. Company income and revenues must be utilized exclusively for the fulfillment of the stated objectives.
    6. Founders, members, and directors are prohibited from directly or indirectly withdrawing any remuneration from the company.
    7. Profits cannot be distributed to members or directors of the company.

    Incorporation Process

    The incorporation process of a Section 8 company involves the following steps:
    1. Establish a nonprofit organization with the aim of social work and welfare.
    2. Prepare a clear project plan and vision for the next three years.
    3. Gather and submit the required documents.
    4. File the application for Section 8 company registration with the Registrar of Companies.
    5. Fulfill all compliance requirements and regulations specified for Section 8 companies.

     

    As of June 7, 2019, the Companies (Incorporation) Sixth Amendment Rules, 2019 have simplified the incorporation process for Section 8 companies. The key changes include:

     

    1. Reservation of Name: The applicant can now apply for name reservation in Form INC-1. The requirement for obtaining a separate name approval letter has been eliminated.
    2. Integrated Incorporation Form: The integrated SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form has been introduced, which combines multiple forms into a single application.
    3. This form facilitates the incorporation of a Section 8 company along with applications for DIN (Director Identification Number) and PAN (Permanent Account Number).
    4. Centralized Processing: The applications for Section 8 company incorporation are now processed centrally at the Registrar of Companies (ROC) office. The Regional Director’s approval is no longer required.
    5. No Minimum Capital Requirement: Section 8 companies no longer have a minimum capital requirement, making it easier to incorporate such organizations.

    Required Documents for Section 8 Company Registration

    To register a Section 8 company, the following documents are required:
    1. Permanent Account Number (PAN) and Aadhaar card of Directors and Shareholders.
    2. Latest Bank Statement.
    3. Utility bills (e.g., Telephone, Electricity, Water).
    4. Passport, Driving license, or Voter Identity Card.
    5. Passport-size photographs of all directors and shareholders.
    6. Copy of the Rental agreement for the registered office (if the property is rented).
    7. Digital Signature Certificate.
    8. Memorandum of Association.
    9. Articles of Association.
    10. Director Identification Number.

    Annual Compliance Requirements for Section 8 Companies

    After the successful incorporation of a Section 8 company, certain annual compliance requirements must be fulfilled:
    1. Filing of Annual Returns : Section 8 companies are required to file their annual returns in Form MGT-7 with the ROC within 60 days from the date of the Annual General Meeting (AGM).
    2. Financial Statements : The financial statements of the company, including the Balance Sheet, Profit and Loss Account, and Cash Flow Statement, should be prepared and filed with the ROC in Form AOC-4 within 30 days from the date of the AGM.
    3. Auditing of Accounts : The accounts of the Section 8 company must be audited by a qualified Chartered Accountant in accordance with the Companies Act.
    4. Maintaining Books of Accounts : Section 8 companies are required to maintain proper books of accounts, including records of all financial transactions, assets, liabilities, and income and expenditure statements.

    Advantages of Section 8 Company Registration

    Registering as a Section 8 company in India offers several advantages, including:
    1. Limited Liability : Members of a Section 8 company have limited liability, meaning their personal assets are protected in case of any legal or financial obligations of the organization.
    2. Tax Benefits : Section 8 companies enjoy various tax exemptions and benefits, including tax deductions on donations received and exemptions on income generated for charitable purposes.
    3. Recognition and Credibility : Being registered as a Section 8 company provides legal recognition and enhances the credibility and trustworthiness of the organization.
    4. Perpetual Succession : Section 8 companies have perpetual succession, which means that the organization continues to exist even if the directors or members change.

    Additional Considerations

    Before proceeding with Section 8 company registration, it is essential to consider the following:
    1. Compliance Requirements : Section 8 companies are subject to several compliance requirements, including annual filings, maintenance of books of accounts, and adherence to the Companies Act regulations. It is crucial to ensure dedicated resources and systems are in place to fulfill these obligations.
    2. Objectives and Vision : Clearly define the objectives and vision of the organization to ensure alignment with the activities permitted for Section 8 companies. This will help in drafting the Memorandum of Association and Articles of Association accurately.
    3. Professional Assistance : Seeking professional assistance from company secretaries, chartered accountants, or legal experts can simplify the registration process and ensure compliance with all legal formalities.