In order to promote non-profit objectives, a company must register as a Section 8 Company. In addition to trade, commerce, arts, charity, education, religion, the environment, protection, social welfare, sports, and research, there are many other objectives.
What Is a Section 8 Company in India?
Under the Companies Act of 2013, non-profit organizations in India are usually registered with the Registrar of Societies as a society or as a Section 8 company.
If you want to register as a Section 8 company, you need to remember these points:
- The number of directors must be at least two
- A Section 8 company does not require a minimum paid-up capital
Profits of a Section 8 Company
- These companies use their profits to promote the objectives they support
- Furthermore, they aren’t distributed as dividends
Section 8 vs. Section 25 Companies
Section 8 companies are the same as Section 25 companies under the old Companies Act, 1956. The new Companies Act of 2013 replaces Section 25 with Section 8.
Eligibility Criteria to Have a Section 8 Company
Section 8 companies in India must meet the following criteria and remember the following points. Furthermore, all criteria must be confirmed by the central government.
- In addition to promoting science, commerce, education, art, sports, research, charity, social welfare, environmental protection, or any other cause, your company should contribute to science, commerce, education, art, sports, sports research.
- Further, your company should invest all profits or income generated after incorporation only in such objectives
- Dividends will not be paid to members of your company
Documents Required to Register a Section 8 Company
If you open a Section 8 Company, then you need to have the following documents:
- Director Identification Number (DIN)
- Digital Signature Certificate (DSC)
- Memorandum of Association
- Article of Association
- Photographs (passport size)
- Proof of identity i.e. Aadhaar Card, passport, voter ID
- Director details
- Address proof
- Bank details
Section 8 Company Incorporation Procedure
Obtaining a digital signature for directors
Like private limited companies, Section 8 companies are governed by a board of directors. Each director’s DSC is obtained as part of the incorporation process. In addition, the following documents must be submitted:
- PAN or Aadhar card.
- Passports, drivers licenses, voter IDs, and government IDs.
Following submission of these documents and completion of OTP and eKYC, a DSC must be obtained in the applicant’s name.
Section 8 Company Name Approval
Section 8 Company name approval applications can be initiated to the MCA concurrently with a digital signature application. Be sure to use a word such as foundation, forum, association, federation, chamber, council, or electoral trust at the end of the company’s name.
You can only register your company under a name that has been approved. As soon as the name is approved, you will have 30 days to begin the incorporation process.
Memorandum of Association (MoA) and Articles of Association (AoA)
Following the approval of the name, they are drafted. As well, the Memorandum of Association defines the scope of a company’s operations. An Article of Association is a document that governs the internal management of a company.
Moreover, MOAs of Section 8 companies must be in form INC-13, while AOAs for Section 8 companies do not have a prescribed format.
Filing of SPICe 32 Form
As soon as you receive approval of the proposed name, you can file SPICe 32. Along with the filing, you must also file the MOA and AOA.
Furthermore, you must declare that the MOA and AOA are in compliance with Section 8 and its rules.
In addition, you need to submit:
- Declaration of individuals applying in Form INC-15
- Estimate of the future annual income and expenditure of the company
- Name approval letter
- Consent and declaration of first directors in Form DIR-2
- Self-declaration by first subscribers in Form INC-9
- PAN and Aadhaar of first directors and subscribers
- Proof of registered office
- Utility bills
- NOC of the owner, if the office is leased
The paperwork can be overwhelming at times, so you may need expert assistance. In addition, our team at Vakilsearch will handle every step of the process for you and answer any questions you may have along the way.
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