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Section 8 Company

Section 8 Company Registration in India is a popular choice among entrepreneurs due to its benefits such as Section 8 Company Registration, separate legal entity, and ease of raising capital. 

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Section 8 Company Registration

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Overview of Section 8 Company Registration in India.

Section 8 of the Companies Act, 2013 in India provides a unique opportunity for organizations with charitable objectives to incorporate as a company. These entities, commonly known as Section 8 companies, operate with the primary goal of promoting social welfare, charity, education, environment conservation, and other similar objectives. This article aims to provide a detailed overview of Section 8 company registration, outlining the key steps, benefits, and requirements for NGOs considering this legal structure.

A Section 8 company, as per the Companies Act, 2013, is formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object. Unlike other companies, Section 8 companies do not have the primary objective of profit generation; instead, they aim to apply their profits towards promoting their stated objectives.

Why is it necessary to choose the right business structure in India?

  1. Legal Compliance:
  2. Non-profit Purpose:
  3. Tax Benefits:
  4. Credibility and Trust:
  5. Limited Liability:
  6. Access to Funding:
  7. Perpetual Existence:

Benefits of Section 8 Company Registration in India

  1. Legal Recognition and Credibility: Section 8 Company registration provides legal recognition to the NGO, enhancing its credibility and trustworthiness in the eyes of donors, beneficiaries, and other stakeholders. This recognition can lead to increased support and partnerships.
  2. Tax Benefits: Section 8 Companies enjoy various tax benefits, including exemptions from income tax, provided the income is applied for the charitable or philanthropic purposes of the organization. Additionally, donors to Section 8 Companies can avail tax benefits under Section 80G of the Income Tax Act.
  3. Limited Liability: Members and directors of a Section 8 Company have limited liability. This means their personal assets are protected in case the organization faces any legal liabilities or debts, offering a sense of security to those involved.
  4. Perpetual Succession: Unlike other forms of organizations, a Section 8 Company has perpetual succession. This means that the existence of the NGO is not affected by the death or departure of its members or directors. It ensures the continuity of the organization’s mission and activities.
  5. Access to Funding: Being a registered Section 8 Company opens up avenues for accessing various sources of funding, including government grants, foreign contributions, corporate social responsibility (CSR) funds, and philanthropic donations. This facilitates financial sustainability and enables the organization to scale its impact.
  6. Flexibility in Operations: Section 8 Companies have flexibility in their operations, allowing them to undertake a wide range of charitable activities, including education, healthcare, environmental conservation, poverty alleviation, and cultural promotion, among others. This flexibility enables them to adapt to changing societal needs and address emerging challenges effectively.

How Register Helps in the Section 8 Company Registration Process?

Step 1: Conducting Preliminary Research

Before initiating the registration process, conduct thorough research to ensure clarity on your organization’s objectives, mission, and target beneficiaries. Determine the feasibility of your social welfare activities and identify the geographical scope of your operations.

Step 2: Choose Suitable Name and Objectives

Select a unique and meaningful name for your NGO that reflects its mission and values. Ensure the name complies with the naming guidelines specified by the Ministry of Corporate Affairs (MCA). Define clear objectives aligned with the intended social causes and activities your organization will undertake.

Step 3: Drafting Memorandum and Articles of Association

Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) outlining the objectives, governing rules, and regulations of your Section 8 Company. Seek legal assistance to ensure compliance with the Companies Act, 2013, and other applicable regulations.

Step 4: Obtaining Digital Signatures and Director Identification Numbers (DIN)

Obtain Digital Signatures Certificates (DSC) for all proposed directors to facilitate online filings. Additionally, apply for Director Identification Numbers (DIN) for each director through the MCA portal.

Step 5: Filing for Name Approval

Submit an application for name approval through the RUN (Reserve Unique Name) service on the MCA portal. Ensure the proposed name complies with regulatory guidelines and is not identical or similar to existing registered companies or trademarks.

Documents Required for Section 8 Company Registration in India

1. Profile of Promoters (E-lawyering doc)
2. Income Projection
3. Grounds of Application (e-lawyering doc)
4. INC 15 – Declaration
5. Draft Memorandum of Association
6. Draft Articles of Association
7. Copy of PAN
8. Copy of Address Proof – Telephone Statement
9. Second ID Proof
10. Electricity Bill Copy or
11. Gas Bill
12. Ownership proof

Faq - Company Registration

A Section 8 Company, as per the Companies Act, 2013, is a non-profit organization formed with the main objective of promoting charitable activities, arts, science, commerce, education, social welfare, religion, environment protection, or any such other objectives. Unlike other companies, the primary aim of a Section 8 Company is not to earn profits but to promote social welfare causes.

  • Non-profit motive: Section 8 Companies operate with the sole purpose of promoting charitable or social welfare objectives without aiming to generate profits for its members.
  • Limited liability: Members of a Section 8 Company have limited liability, meaning their personal assets are not at risk in case of any liabilities incurred by the organization.
  • No minimum capital requirement: Unlike other types of companies, Section 8 Companies do not have any prescribed minimum capital requirement for registration.
  • Exemption from certain provisions: Section 8 Companies enjoy exemptions and relaxations in compliance with certain provisions of the Companies Act, making it easier for them to function effectively.
    • To register a Section 8 Company, the following conditions must be met:

     

    • The proposed company must have charitable objects or objectives mentioned in its Memorandum of Association.
    • The promoters or directors must not have any financial interest in the company's profits or gains.
    • The proposed name of the company should not resemble the name of any existing company or violate any trademarks.

  • The registration process involves the following steps:

    • Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors.
    • Apply for name reservation through the Ministry of Corporate Affairs (MCA) portal.
    • Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) in the prescribed format.
    • Submit the application for incorporation along with necessary documents to the Registrar of Companies (ROC).
    • Upon approval, the ROC issues a Certificate of Incorporation, following which the Section 8 Company is deemed registered.

A Section 8 Company typically has a Board of Directors responsible for managing its affairs, including decision-making, policy formulation, and implementation of projects. The Board may also appoint key managerial personnel and form committees as necessary to oversee specific functions such as finance, governance, and fundraising. Additionally, the company may have members or volunteers who actively participate in its activities and contribute to achieving its objectives.

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