A section 8 company registered under the company’s act, 2013 is a non-profit organization (NPO) to promote art, science, literature, sports, social welfare, or knowledge sharing for a purpose or charity. The profits or income generated from there cannot be distributed as dividends to its shareholders and has to be used for promoting charitable purposes only.
These companies are limited companies that are established under the company’s act. The government grants them a license under section 8 company’s act. The registration procedure for section 8 company is similar to that of a private limited company. The only difference is these companies cannot add limited or Pvt limited in its name. Taxpotter provides expert help throughout the process for section 8 company registration.
Section 8 companies or non-profit organizations (NPO) are similar to trusts or society. But the difference is trusts or societies are registered under state regulations and a non-government organization (NGO) is governed by the central government and can work across the country.
An individual or group of individuals are eligible to register a section 8 company if they hold the below-mentioned intentions or objectives
Other conditions to be fulfilled for registering a section 8 company are:
There is no need for minimum paid-up capital. That means a company can be formed without any share capital and required funds can be brought from donations or subscriptions.
There are various exemptions and compensations provided to the company as well as to the donors.
No stamp duty is applicable on the incorporation of section 8 company. As the company is exempted from payment of stamp duty for registration.
The company has a separate legal identity and a different personality from its members. The company also has perpetual succession.
Section 8 companies are more credible compared to other forms of charitable trusts or organizations. They are governed by the central government and are required to file annual audits mandatorily.
Those donating to the NGOs are eligible to claim tax exemption under sections 12A and 80G of the income tax act.
For registering a section 8 company in Indian following steps are to be followed
The first step is to apply for a Digital signature certificate (DSC) and Digital identification number (DIN for all the directors.
The DSC is an electronic document used to authenticate all the documents online and DIN is a unique identification number for the directors. Both of these are mandatory before applying for company registration
The next is to apply for name approval by filing a reserve unique name (RUN) form, initially you will be allowed to propose for a maximum of 2 names only.
Section 8 companies should contain words like foundation, society, association, club, council, or chamber of commerce in their name.
After getting the name approval from ROC, The applicant must draft the MOA and AOA. Both these forms are necessary to register for the company.
The memorandum of association describes the approval of the company and articles of association have the rules and regulations of the company.
This is the most crucial step. Apply the INC-12 form for the section 8 company registration license with the regional director (RD). The RD will review the objectives, plans and issue licenses for company registration.
After getting a license, file the SPICe+ form with the registrar of the company (ROC) along with the required documents.
Once all clarifications have been given to the ROC, then he will issue a certificate along with a unique company identification number.
After getting the incorporation certificate from the ROC you must apply for PAN, TAN, and a bank account.