Section 8 Company- Process of registration and everything you need to know

What is Section 8 Company?

A group or company is referred to as Section 8 Company when it registered as a Non-Profit organisation (NPO) i.e. while it has motive of promoting arts, commerce, education, charity, defence of environment, sports, science, research, collective welfare, faith and intends to service its profits (if any) or other earnings for promoting these objectives.

NPOs are not allowed to pay dividends to the company’s members and has to be for the promotion of charitable objectives. Such companies achieve an assimilation certificate from the chief administration and are apt to adhere to the policy one by the government.

Features Of A Section 8 Company

There are various features of Section 8 Company. Let’s have a look at them:

• Charitable objectives: Section 8 companies can not carry out the business with an ambition to make profits. Their objectives are wholly charitable in nature. They ambition to auxiliary causes like science, culture, research, sports, religion, etc.
• No lowest segment capital: Section 8 companies, just like every other companies, make sure of not having a prescribed least amount paid-up capital.
• Limited liability: Members of these companies bottle no more than arranged partial liability.
• Government license: Such companies are able to run merely if they maintain the pivotal Government’s license. The management preserves annul this right as well.
• Privileges: Since these companies possess charitable objectives, the Companies perform has accorded a number of payback and exemptions to them.

How Section 8 Company is Formed?

A person or a group of person who wishes to form Section 8 company  can make an application to the Registrar of Companies with the help of the required forms to form a company with charitable purposes under Section 8 of Companies Act. If the Central Government is satisfied, it would allow such an application but on its own terms and conditions asked under the license granted by it. Once acquired, the Registrar of Companies will register the company when the applicant clears all the required fees.

It is important to remember that such companies can only be limited companies. The privileges and obligations of the limited companies apply to this case. These companies do not require to include the words like ” Limited” or ” Private Limited” in its name like either companies have to.

Procedure For Section 8 Company Registration

Apply For The Desired Name

The initial phase in incorporating a company is for saving the name of the proposed organisation in part A of SPICe Plus (SPICe+) structure. In this form pick your business movement and record for two proposed names, on the off chance that ROC will dismiss the proposed name, at that point document or file again with two new names inside a specific time limit from the date of dismissal (15 days).

Apply For The DSC

The second move is to be apply for the DSC which is essential for filling the forms electronically to the agency of Corporate dealings which are capable of being obtained from specialized agencies.

Fill the Application for Incorporation (SPICe plus FORM – SPICe+)

Once, your name gets held under it will be substantial for 20 days from the date of approval, inside 20 days you need to fill up the particular application form for incorporation alongside all the imperative connections and reports and transfer it on the web. SPICe+ is a high level form mix of 8 form in one. Through this proposed organisation can apply for once:

• Name reservation
• Incorporation
• Apply For DIN
• TAN application
• PAN application
• EPF registration
• ESIC registration
• GST registration

For section 8 company candidates need to attach extra reports with SPICe+ structure partially – B

• The actual duplicate of MOA draft properly endorsed by individuals and witnesses.
• The actual duplicate of AOA draft appropriately endorsed by individuals and witnesses.
• Announcement in structure INC-14 by any rehearsing proficient.

Certificate Of Commencement of Business

When the application of incorporation of the organisation is affirmed and the Certificate of Incorporation is given by the ROC, the Company will petition for looking for endorsement for beginning the business inside 180 from the date of incorporation of the Company.

Documents Required for Section 8 Company Registration

• Arrange documents that are required for the common registration process. Hence, a businessman needs to collect its documents including PAN which is of the utmost importance.
• Address proof is required, it could be a driving license, aadhar card, electricity bill or telephone bill. But these bills should not be older than 2 months.
• All the people who are involved in the registration process are asked for the latest passport size photographs. For instance all the Directors and Promoters have to submit their photographs.
• A Rent Agreement.
• It is mandatory to submit the Utility Bill of the suggested Registered Office.
• The consent to Act as a Director and The Directors Directorship details in the companies are filled.

Advantages of Section 8 Company

• Section 8 Company has systematic execution with a larger flexibility.
• It avoids the accurate procedure of registration and physical presence of the partners or members.
• There is no minimum and maximum limit on the paid up capital.
• It provides with the tax benefits according to section 12AA and 80G of the Income Tax Act.
• It gives the liability to all the partners or members of any company or firm to access the Directorship.

Hence, Section 8 Companies are formed with a motive of charity and works on the pillars of not gaining any profits to itself rather helping the people to fulfil their needs.

Suggested Read: Difference between Section 8 Company, Trust and Society