A Section 8 Company is a legal entity established under the Companies Act, 2013 in India, intended for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object. This type of company is akin to a non-profit organization and is eligible for certain exemptions and benefits from the government. The profits, if any, are reinvested towards the core objectives of the company and not distributed as dividends to the shareholders.
Benefits of Registering a Section 8 Company
- Exemption from Stamp Duty: Generally exempt from the payment of stamp duty applicable on the section 8 company registration of private or public limited companies.
- Tax Benefits: Possible income tax exemptions under Section 12AA and 80G of the Income Tax Act, subject to fulfilling certain conditions.
- No Minimum Share Capital Requirement: Unlike other companies, a Section 8 company does not require a prescribed minimum paid-up share capital.
- Increased Credibility: Registration enhances credibility among donors, government departments, and other stakeholders, facilitating easier access to grants and donations.
- Limited Liability: The liability of the members is limited to the amount of money they contribute.
Section 8 company Registration Process
Online Registration
- Digital Signature Certificate (DSC): Obtain a DSC for the directors of the company to file documents electronically.
- Director Identification Number (DIN): Each director must have a DIN, which can be obtained by filing an application online.
- Name Approval: Apply for the company’s name approval by submitting Form INC-1 to the Ministry of Corporate Affairs (MCA). The name must include words like Association, Society, Council, Club, Charities, Foundation, Academy, Institute, Organisation, Federation, Chamber of Commerce, Development, and more.
- License Under Section 8: File Form INC-12 for the license to operate as a Section 8 company. This form is to be accompanied by the MoA and AoA of the company, declaring the promotion of charitable objects.
- Incorporation Application: Submit the SPICe form along with attachments, including the declaration by professionals, directors’ consent, and affidavit.
- Grant of License and Incorporation: Upon satisfaction, the Registrar will grant the license under Section 8 and the Certificate of Incorporation will be issued.
Offline Registration
- Document Preparation: Prepare the necessary documents, including MoA and AoA drafted specifically to reflect the charitable objectives of the company.
- Submission to ROC: Submit these documents along with the Form INC-1 for name approval and Form INC-12 for license application to the Registrar of Companies (ROC).
- Verification by ROC: The ROC will scrutinize the application and documents. If compliant, the ROC will issue a license to operate as a Section 8 company.
- Certificate of Incorporation: After the license is issued, the ROC will process the incorporation and issue the Certificate of Incorporation.
Also read : 12a and 80g registration
Conclusion
Registration of a Section 8 Company is ideal for individuals or groups focused on non-profit purposes that benefit society. The process involves strict scrutiny by the MCA to ensure that the company will not operate for profit motives. Once registered, a Section 8 company enjoys numerous benefits including tax exemptions and credibility enhancement, crucial for non-profit operations. Compliance with regulatory requirements is essential to maintain the company’s status and benefits.
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