SECTION 8 COMPANY
A Section 8 Company is a type of non-profit organization registered under Section 8 of the Companies Act, 2013 (India). It is established with the objective of promoting arts, commerce, science, sports, education, research, social welfare, religion, charity, or any other useful object. The company’s profits, if any, are applied solely towards promoting these objectives and are not distributed as dividends to its members.
- Non-Profit Objective
- Limited Liability
- No Minimum Capital Requirement
- Tax Benefits
- Separate Legal Entity
Overview of Section 8 Company Registration
A Section 8 Company is a type of organization registered under the Companies Act, 2013 in India, primarily aimed at promoting social causes such as education, charity, art, science, social welfare, and more. It is a non-profit entity where profits generated are utilized for its charitable purposes. A Section 8 company enjoys the same benefits and legal standing as a corporation but with a focus on societal betterment rather than profit generation.
Section 8 companies are ideal for those wishing to run NGOs or social organizations while retaining a separate legal identity and perpetual existence. This structure offers several advantages such as tax exemptions, no minimum capital requirement, and reduced compliance burdens.
Benefits of Section 8 Company Registration
- Tax Exemption:
- Section 8 companies enjoy 100% tax exemption on profits that are used for charitable purposes, offering significant financial benefits.
- No Minimum Capital Requirement:
- There is no minimum capital requirement, providing flexibility in financial planning for the company’s growth.
- No Stamp Duty:
- The registration process for Section 8 companies is free from stamp duty, reducing the overall cost of incorporation.
- Separate Legal Entity:
- As a Section 8 company, the organization is a distinct legal entity, ensuring perpetual existence and enhanced credibility.
- Increased Credibility:
- Due to strict legal compliance, Section 8 companies are generally perceived as more credible and trustworthy compared to NGOs or trusts.
- Flexibility in Naming:
- Section 8 companies can choose their name without the mandatory addition of “Section 8” in the name, allowing for more creative and appealing business identities.
Required Documents for Section 8 Company Registration
The registration process for a Section 8 Company in India requires the following documents:
Identity Proof of Directors:
Aadhar Card, PAN Card, Voter ID, Passport, or Driving License.
Proof of Address
Utility bills (electricity, water, etc.), Bank Statements, or Lease Agreement for the registered office.
Registered Office Proof
Rent Agreement, No Objection Certificate (NOC) from the landlord, or ownership documents.
Additional Documents:
Email ID and Mobile number of directors, Latest Bank Statements, and Proof of Indian Director’s residency.
PAN Card for the Company:
A PAN card must be obtained for tax-related activities. These documents help establish the legitimacy of both the company and its directors.
Procedure for Section 8 Company Registration
Here’s a streamlined guide to registering a Section 8 Company:
- Apply for Digital Signature Certificate (DSC):
- The first step is obtaining a DSC for online filings. It can be done within 24 hours of applying.
- Reserve a Unique Company Name:
- The company name must be unique and approved by the Ministry of Corporate Affairs (MCA) through the Reserve Unique Name application.
- Apply for Section 8 Company License:
- Complete Form INC-12 to apply for a license from the MCA. This license is essential for the company’s registration.
- SPIC-e Form (INC-32) Filing:
- This online form includes details of the company, its directors, and members, along with applications for Director Identification Number (DIN), PAN, and TAN.
- File e-MOA (INC-33) and e-AOA (INC-34):
- Submit the Memorandum of Association (MOA) and Articles of Association (AOA). MOA outlines the company’s objectives, while AOA governs internal management.
- Certificate of Incorporation:
- After the review and approval of documents, the Ministry of Corporate Affairs issues the Certificate of Incorporation, marking the official registration of the Section 8 company.
Timeframe for Section 8 Company Registration
Typically, the registration process takes 7 to 15 days, depending on the approval from the Ministry of Corporate Affairs (MCA). Delays may occur due to incomplete documentation, technical errors, additional legal permits, or payment issues.
In summary, Section 8 Company Registration is a highly suitable option for individuals or groups seeking to establish a non-profit organization with a clear focus on social impact. The process is straightforward, and the benefits, including tax exemptions and legal recognition, make it an attractive option for those wishing to contribute to societal welfare through their business ventures
