All About Registration of Section 8 Company with Procedure

Seep Gupta
Seep Gupta at September 06, 2022

A company which is registered for social welfare and as a Non-Profit Organisation (NPO) is known as a Section 8 company. These companies are registered under the “Ministry of Corporate Affairs”. For registration of a company under Section 8 of the Company’s Law, the company should have the will and motivation to promote a diverse range of social subjects varies from arts, education, commerce, protection of the environment, science, religion, research, sports and other fields related to charitable and social welfare.

The companies registered under Section 8 of the Companies Act, 2013 get their incorporation certificates from the central government as compared to other companies which get their incorporation certificates from the state government. and income or profits gained by such companies must be used to promote social welfare and other charitable subjects. The income earned by these companies cannot be shown for the payment of dividends to the members of these companies.

Significant Features of Companies Registered Under Section 8 of Company’s Act

There are several characteristics of companies registered under Section 8 of the Companies Act. These are given below: -

Promotion of Social Welfare

These companies are incorporated with the sole aim of promoting charity, social welfare, religion, art, science, environment, education, and research and their main aim is to promote social welfare activities. That’s the objective behind their incorporation under Section 8 of the company’s Act.

No Minimum Capital

Like other companies, these companies do not require any prescribed minimum paid-up share capital.

Licensed by Government

These companies are licensed by the central government and receive their certificates of incorporation from the central government, unlike other companies. These companies are non-profit organizations and receive donations from the general public for social work and welfare.

No Dividend Distribution

These companies don’t distribute dividends to their members because it is restricted in the section. They cannot distribute profits to their members, rather the profits and income can be used for the promotion of social welfare.

Limited Liability

These companies under section 8 are formed as private limited or public limited companies. Members of this company have limited liability as per their shares.

The Procedure of Incorporation for Such Companies

The following steps are required for the incorporation of a Section 8 company. These are mentioned below: -

Selection of the Desired Name

The first and foremost step required for the incorporation of a company is by selecting and reserving two proposed names in Part-A of the SPICe+ form. If CRC or Central Registration Centre reject a particular name, then the applicant has a right to apply for two new proposed names within 15 days of the date of rejection.

Apply for the DSC (Digital Signature Certificate)

The process of incorporation of the company is online in India. Hence, applying for DSC or digital signature certificate becomes crucial. DSC must be applied mandatorily for each member or shareholder of a company. DSC or digital signature certificate becomes compulsory for the incorporation of the company.

Filing of Application for Incorporation

After reserving the company’s name, the applicant 20 days needs to fill out the form for incorporation of the company along with all the requisite documents and attachments and upload it online. SPICe+ is an advanced form combination of 8 forms in one. One can apply for various registrations via one form such as GSTIN registration, TAN, PAN, EPFO, ESIC registration, etc.

The Part B of the form contains details regarding the internal structure of a company such as the total number of directors and members, authorised share capital etc. These details need to be filled in precisely along with the drafting of MoA, and AoA and filling the AGILE form for procuring GSTIN.

When all these details are filled, signatures will be attached and all the forms along with requisite documents are uploaded on the website of MCA (Ministry of Corporate Affairs).

Certificate of Commencement of Business

Once the incorporation form is approved by the Ministry of Corporate Affairs, the incorporation certificate will be issued, and the company can file for the approval of the commencement of business within 180 days from the date of incorporation of the company.
Documents Required for the Incorporation of Section 8 Companies

The following documents are required which are given below: -

Documents Required for Incorporation of a Private Limited Company

  • PAN Card
  • Aadhar Card
  • Photograph of the proposed director.

ID Proof of Proposed Directors and Members

Address Proof of Proposed Members and Directors

Advantages of Section 8 Companies

There are several advantages of Section 8 companies, these are given below: -

  • Section 8 companies have minimal stamp duty because of the privileges given to them by the government. Hence, stamp duty becomes less chargeable.
  • Section 8 companies can get tax benefits too because of the objectives they are incorporated for. They can get tax benefits if they are registered under Section 80G and 12AA of the Income Tax Act.
  • It is optional for Non-Profit Organisations or Section 8 companies to use suffixes such as the private limited or limited company.
  • There isn’t any minimum capital for the incorporation of a private limited company according to the Company’s Act, 2013. One can even start a private limited company with 0 paid-up capital.

Conclusion

In a nutshell, it can be concluded that Section 8 companies are incorporated with the intent to promote social welfare such as charity, religion, science, arts, research, innovation, etc. These companies get many perks and privileges from the central government so that they can function efficiently and seamlessly.

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