Section 8 Company Registration

Benefits of Section 8 Company Registration

• Tax Exemption: Donors who have contributed to Section 8 companies can claim tax exemption against the donation if the Section 8 company is registered under Section 80G of the Income Tax Act.
• Zero Stamp Duty: A Section 8 company doesn’t need to pay stamp duty charges, unlike other private and public limited organizations.
• Separate Legal Entity: A Section 8 company has perpetual existence with organized functioning and good flexibility. It is considered a separate legal entity.
• Title Name: Section 8 companies don’t need to add suffixes like “private limited” or “public limited” next to their legal name. Instead, they can register with extensions like association, federation, council, society, foundation, academy, institute, club, etc.
• Credibility: Section 8 companies have more reliability than any other non-profit organization structure, like a trust or society. The compliances laid down by the government for this entity make these companies more trustworthy.

Features of Section 8 Company Registration in India

A Section 8 company embraces the following features:

• Charitable Purposes: The profits gained through this company are used towards promoting the objectives of the company and cannot be shared by the partners.
• No Minimum Share Capital and Limited Liability: Compared to other similar companies, it is not necessary to have a base paid-up capital for a Section 8 company. Also, members of Section 8 companies have limited liability only to the extent of their investment.
• Privileges: Sections 80G and 12AA of the Income Tax Act, 1961 provide these types of companies with tax benefits and exemptions.
• Firms as Members: Section 8 authorizes firms to become members of these companies, along with individuals and associations.
• Government License: A Section 8 company can only operate if it has a license from the Central Government. The government can revoke this license when necessary.

Eligibility for Section 8 Company Registration in India

• An individual, a Hindu Undivided Family (HUF), or a limited company can start a Section 8 company in India.
• A minimum of two directors is required to fulfill all the compliances and requirements of Section 8 company registration.
• At least one of the directors must be an Indian resident.
• The sole purpose of the company must be to promote science, commerce, education, art, sports, research, religion, charity, social welfare, protection of the environment, or other similar objectives.
• The organization must use all its profits and income obtained towards the promotion of its objectives only.
• The company must not pay any dividends to its members.

Documents Required for Section 8 Company Registration

For Directors / Shareholders:

• Self-attested PAN card
• Self-attested Aadhar card
• Recent bank statement, electricity bill, or telephone bill for address proof
• Two passport-size photos

For Registered Office:

• Property tax bill or property document or similar for ownership proof
• A utility bill – electricity bill/gas bill/phone bill
• No Objection Certificate (NOC) from the owners if the premises are rented
• Attested copies of Memorandum of Association (MoA) and Articles of Association (AoA) in the English language.

Section 8 Company Registration Process

1. Get DSC: Obtain a Digital Signature Certificate (DSC) for the proposed directors of the Section 8 company through the certifying authorities designated by the government.
   • Required documents: Aadhar card or PAN card, driver’s license, passport, election ID, or other government-issued identification.
   • Complete an OTP (One Time Password) and an eKYC (electronic Know Your Customer) procedure after submitting these documents.
2. Get DIN: After receiving DSC, file form DIR-3 with the Registrar of Companies (RoC) to get Director Identification Numbers (DIN). The RoC will allot a unique DIN to the proposed directors only after form DIR-3 is approved.
3. Name Reservation: The next step is getting a unique name for the company. File form INC-1 with the RoC to apply for the name of the company. An average of 6 names will be submitted in order of preference, and one name will be allotted based on availability.
4. Apply for License: To apply for the license for the Section 8 company, file form INC-12 with the RoC, attaching all the required documents. A license under Section 8 will then be issued as soon as the form gets approved.
5. Incorporation: After obtaining a license, file the form SPICe+ with the RoC for the company along with the above-mentioned documents. The RoC then issues a certificate of incorporation/Section 8 company registration certificate along with a unique Corporate Identification Number (CIN) if they are satisfied with the application.

Timeline for Section 8 Company Registration Process

Section 8 Company Registration Fees

• To obtain DSC & DIN, charges will be ₹3000.
• To reserve a name for the company, it will be ₹1000.
• Government and incorporation fees will range from ₹6000-8000 (it may vary).
• The charges for notary and stamps are ₹2000.

Compliance Required for Section 8 Companies

• Auditing: An auditor is appointed in the first annual general meeting who is responsible for all income filing of the company. An auditor can be an individual or a firm and it should be filed in Form ADT-1 within fifteen days from the date of auditor appointment. A notice of the appointment must be filed with the registrar.
  • Section 8 companies must appoint an auditor under Section 139 of the Companies Act 2013.
• Maintaining the Register: According to Section 88 of the Companies Act, 2013, a statutory register is maintained that includes loans obtained, charges created, members, and other information.
• Meetings: General body meetings and other statutory meetings should be conducted every year on or before 30th September. All the directors, members, and auditors should be informed at least 21 days before the meeting by publishing a notice on the company’s official website.
  • A report of the annual general meeting must be filed within 30 days after completion of AGM in form MGT-15.
• Report by Directors: Directors of the Section 8 company must file their annual report in form AOC-4 under Section 134 of the Company’s Act, 2013 with all fiscal data in an appropriate manner. The director’s report is prepared to provide a detailed explanation about the exact financial condition of the company to the shareholders. The board of directors will be responsible for this report.
• Accounting of the Company: The balance sheet, profit and loss account, etc., are to be filed by the company for the previous year to the registrar. Within 30 days from the general body meeting, the financial statement can be filed in the appropriate form (E-form AOC-4).
• Tax Returns: Before the end of the 30th of September, tax returns must be filed at the end of every assessment year.