Section 8 Company Registration – Online

A Section 8 Company, as defined under the Companies Act, 2013 in India, is a legal structure designed for organizations with non-profit objectives. It is analogous to a non-profit organization in many other countries. The key characteristic of a Section 8 Company is that it operates to promote charitable, educational, scientific, cultural, social, or environmental causes, and its primary purpose is not to generate profits for its members. The primary objective of a Section 8 Company is to promote activities for the public's benefit rather than generating profits for its members or shareholders. Any income or surplus generated is ploughed back into the organization's activities to further its objectives. The name of a Section 8 Company should typically include words like "Foundation," "Association," "Society," "Council," "Club," "Charity," "Institute," or other similar terms to reflect its non-profit nature. Section 8 Companies are governed by a board of directors or governing council. These members manage the day-to-day operations and decision-making processes of the organization. The composition and responsibilities of this board are typically outlined in the MOA and AOA.

Eligibility Criteria Checklist for Section 8 Company in India

The eligibility criteria checklist for Section 8 company registration in India are as follows: 

Non-Profit Objective: The primary motive of a Section 8 company must be to promote charitable or social welfare activities. The company should dedicate its resources and profits towards these causes, rather than distributing them among its members.

No Dividend Distribution: Any income generated by the company cannot be distributed as dividends to its members. Instead, it should be reinvested to further the organization's charitable objectives.

Unique Name: The proposed name for the Section 8 company must be unique and must not infringe on existing trademarks or violate naming guidelines issued by the Ministry of Corporate Affairs (MCA).

Minimum Directors and Members: A Section 8 company must have at least two directors and a minimum of two members to get started.

Registered Office in India: The company should have a registered office address in India. This is the official address for all communications and legal proceedings.

Documents Required for Online Section 8 Company Registration - A Detailed Process

Memorandum of Association (MOA)

The MOA outlines the company's main objectives and activities. It should be carefully drafted to reflect the core purposes of your Section 8 Company. All the subscribers and directors must sign the MOA in the presence of a witness.

Articles of Association (AOA)

The AOA contains the rules and regulations that govern the internal management of the Section 8 Company. It defines the roles and responsibilities of directors, shareholders, and other members associated with the organization.

Director and Shareholder Documents

You will need to submit various documents related to the directors and shareholders of the proposed Section 8 Company, including:

Identity Proof: PAN card, Aadhar card, Passport, or Voter ID.

Address Proof: Recent utility bills, bank statements, or driver's license.

Passport-sized Photographs: Recent photographs of all the directors and shareholders.

 Registered Office Proof

A registered office is required for the Section 8 Company. You need to submit documents supporting the address proof, such as a recent utility bill, lease agreement, or ownership deed.

Declaration by Directors and Shareholders

Directors and shareholders must provide a declaration affirming their eligibility, non-disqualification, and compliance with the necessary requirements for forming a Section 8 Company.

No Objection Certificate (NOC)

If the registered office is rented, you need to obtain an NOC from the landlord, allowing you to use the premises as the registered office of the Section 8 Company.

Statement of Assets and Liabilities

A statement of assets and liabilities of all the members of the governing body, signed by a practising Chartered Accountant, must be submitted for the Section 8 Company registration.

Financial Projections

Provide a detailed projection of the company's income and expenses for the next three years. This document is essential to showcase the financial sustainability of the organization.

Project Report

The project report should describe the activities and programs the Section 8 Company plans to undertake. It should highlight the expected impact on the beneficiaries and the community as a whole.

Bank Account Details

Submit the bank account details of the proposed Section 8 Company. This includes a cancelled cheque and a bank statement reflecting the account's transaction history.

Affidavit

Prepare and submit an affidavit stating that the funds raised for the company's incorporation will be used only for its objectives and not for personal benefits.

Digital Signature Certificate (DSC)

All the proposed directors must obtain a DSC for the online filing of the registration documents.

Form INC-12

Finally, Form INC-12 must be submitted to the Registrar of Companies (ROC) to obtain a license to operate as a Section 8 Company.

Section 8 Company Registration Process: A Step-by-Step Guide

Registering a Section 8 Company in India is a popular choice for organizations that wish to promote charitable, scientific, or other non-profit objectives. These companies are governed by the Companies Act, of 2013, and are similar to non-profit organizations in other countries. Here's a step-by-step guide to the Section 8 company registration process in India:

Digital Signature Certificate (DSC):

All proposed directors and key stakeholders of the Section 8 Company must obtain a Digital Signature Certificate (DSC). This is necessary for online filing of documents with the Ministry of Corporate Affairs (MCA).

Director Identification Number (DIN):

Each director of the proposed Section 8 Company must apply for a Director Identification Number (DIN) by submitting Form DIR-3. This number is essential for director identification and is obtained from the MCA.

Name Approval:

Choose a unique and suitable name for the Section 8 Company. The proposed name should include words like "Foundation," "Association," "Society," "Council," "Club," "Charity," "Institute," or similar terms to reflect its non-profit nature. This name must be checked for availability and approved by the Registrar of Companies (ROC).

Memorandum and Articles of Association (MOA & AOA):

Draft the Memorandum of Association (MOA) and Articles of Association (AOA) for the Section 8 Company. These documents must adhere to the format prescribed under the Companies Act, 2013. The MOA and AOA should outline the objectives, rules, and regulations governing the Section 8 Company.

License under Section 8:

Apply for a license under Section 8 of the Companies Act by submitting Form INC-12 to the ROC. This form requires the submission of several documents, including the MOA, AOA, and a declaration from the proposed directors. The license is essential for the company to function as a Section 8 Company.

Incorporation Application:

After obtaining the Section 8 license, you can proceed with the incorporation by submitting Form INC-32 (commonly referred to as the Simplified Proforma for Incorporating Company Electronically or SPICe form). This application includes details about the company's directors, registered office, and professional declaration. The declaration is typically made by a Chartered Accountant, Company Secretary, or Cost Accountant.

Registrar's Approval:

The ROC reviews the application and documents. If everything is found to be in order, the ROC will approve the incorporation of the Section 8 Company. A Certificate of Incorporation is then issued as evidence of successful registration.

PAN and TAN Application:

After the incorporation, apply for the Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the Section 8 Company. These numbers are essential for tax-related transactions and compliance.

Bank Account:

Open a bank account in the name of the Section 8 Company to manage its finances and transactions. The bank account should align with the company's non-profit objectives.

Income Tax Exemption:

To avail of income tax exemptions, apply for tax exemption under Section 12A and 80G of the Income Tax Act, 1961. This enables the Section 8 Company to receive donations and grants with tax benefits for both the organization and its donors.

Statutory Compliances:

Ensure that the Section 8 Company complies with various statutory requirements, including filing annual financial statements, annual returns, and maintaining proper accounts. Compliance with the Companies Act, 2013, and other applicable laws is essential.

Advantages of Registering a Section 8 Company in India

Registering a Section 8 Company in India offers several advantages, making it an attractive choice for organizations with non-profit objectives. Here are some of the key benefits:

Legal Recognition and Structure:

Section 8 Companies are recognized and regulated by the Companies Act, 2013. This legal recognition provides a structured and organized framework for non-profit organizations to operate in India.

Non-Profit Focus:

The primary advantage of a Section 8 Company is that it is explicitly designed for non-profit activities. It allows organizations to focus on their social, charitable, scientific, or educational objectives without the primary goal of generating profits for members.

Limited Liability:

Members of a Section 8 Company enjoy limited liability, meaning their personal assets are protected in case of financial liabilities or debts incurred by the organization. This provides a layer of security to individuals associated with the company.

Tax Exemptions:

Section 8 Companies are eligible for tax exemptions under Sections 12A and 80G of the Income Tax Act, 1961. This allows them to receive donations and grants with tax benefits for both the organization and its donors.

Greater Credibility:

Being registered under the Companies Act adds credibility and trustworthiness to the organization. Donors, supporters, and partners are more likely to engage with and contribute to a registered Section 8 Company.

Separate Legal Entity:

A Section 8 Company is a separate legal entity distinct from its members. This enables it to own property, enter into contracts, and sue or be sued in its own name, enhancing its operational capabilities.

No Minimum Capital Requirement:

Unlike some other types of companies, Section 8 Companies are not required to have a minimum paid-up capital. This reduces the financial burden on organizations during the registration process.

Transfer of Assets:

In the event of dissolution or winding up, any remaining assets of the Section 8 Company must be transferred to another Section 8 Company, a registered non-profit organization, or the government. This ensures that assets continue to serve non-profit purposes.

Exemption from Stamp Duty:

Section 8 Companies may be eligible for exemptions from stamp duty for various transactions, further reducing operational costs.

Scope for Fundraising:

The legal structure of a Section 8 Company facilitates fundraising activities. It can apply for grants, receive foreign contributions, and raise funds through donations and memberships to support its non-profit objectives.

Flexibility:

Section 8 Companies have flexibility in their operations. They can undertake various activities, such as educational, research, cultural, and social welfare initiatives, as long as they align with their stated objectives in the Memorandum of Association.

Professional Governance:

These companies are managed by a board of directors or governing council, which can include professionals and experts in various fields, ensuring sound governance and compliance with regulatory requirements.

Longevity:

Section 8 Companies are designed to endure, as they are not affected by the changes in their membership. They can continue their non-profit activities despite changes in leadership.

Social Impact:

Ultimately, the greatest advantage of a Section 8 Company is the positive impact it can have on society by addressing various social and charitable causes without the primary motive of profit.

Donations on Registration of Section 8 Company

Accepting Donations for Section 8 Company

Once the Section 8 Company is successfully registered, it can begin accepting donations. However, certain crucial aspects must be considered:

Legal Requirements for Accepting Donations

12A Registration: To be eligible for tax exemptions, the Section 8 Company must obtain 12A registration from the Income Tax Department.

80G Certification: Donors can avail of tax benefits on their contributions only if the organization has an 80G certification. This certification allows tax deductions on donations made to the Section 8 Company.

Foreign Contribution Regulation Act (FCRA): If the organization plans to accept donations from foreign sources, it needs to register under FCRA.