SECTION 8 COMPANY
The primary purpose of registering a company as a Section 8 Company is to promote non-profit objectives such as trade, commerce, arts, charity, education, religion, environment protection, social welfare, sports research, etc.
To incorporate a Section 8 Company, a minimum of two directors are required. Also, there is no requirement of minimum paid-up capital in the case of Section 8 Company.In India, a non-profit organization can be registered under the Registrar of societies or as a Non-profit company under Section 8 of Companies Act 2013.
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NATURE OF sECTION-8 COMPANY
The primary purpose of registering a company as a Section 8 Company is to promote non-profit objectives such as trade, commerce, arts, charity, education, religion, environment protection, social welfare, sports research, etc.
To incorporate a Section 8 Company, a minimum of two directors are required. Also, there is no requirement of minimum paid-up capital in the case of Section 8 Company.
In India, a non-profit organization can be registered under the Registrar of societies or as a Non-profit company under Section 8 of Companies Act 2013.
The profits of this company, if there are any, are applied towards promoting the objectives of the company and not distributed as dividends to its shareholders.
PURPOSE OF NGO-SECTION 8 COMPANY INCORPORATION
The main purpose of establishing a company as a Section 8 company is to promote non-profit objectives such as the following:
- Art
- Science
- Sports
- Education
- Research
- Social welfare
- Religion
- Charity
- Protection of environment
- Any such other object related to the above objects
SECTION 8 COMPANY REGISTRATION ELIGIBILITY CRITERIA
- An Individual or HUF or limited Company is eligible to start a Section- 8 company registration in India.
- Two or more person who will act as a shareholder or Director of the company should fulfill all the requirements and compliances of the Section 8 Company registration.
- At least one of the directors shall be a resident of India. However, a firm may be a member of the company registered under this section.
- The objective should be the promotion of sports, social welfare, the advancement of science and art, education and financial assistance to lower income groups.
- The surplus generated must be used for meeting the principal objective of the section 8 company only.
- Founders, members, and directors of the company cannot draw any remuneration in any form of cash or kind.
- No profit should be distributed among the members and director of the company directly or indirectly
- The company should have the clear vision and project plan for the next three years.
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BENEFITS OF SECTION 8 COMPANY REGISTRATION
There are many advantages of registering an NGO under Section 8 of the Companies Act, 2013, which are as follows:
- No minimum capital: There is no minimum capital requirement for a Section 8 company incorporation and the capital structure of Section 8 can be altered at any time as per the growth requirement of the company
- Tax Benefits: The Company Auditor’s Report Order (CARO) does not apply to the Section 8 company. A Section 8 company enjoys tax benefits under 80G of the Income Tax Act, 1961.
- No Stamp Duty: There is no stamp duty imposed for Section 8 company incorporation in India. The Section 8 company need not pay the stamp duty imposed on the Memorandum of Association (MOA) or Articles of Association (AOA) of a private or public limited company.
- Separate Legal Identity: Section 8 Company registration acquires a distinct legal identity from its members. It has perpetual existence and thus, the entry or exit of any member will not affect the operation of the Section 8 company.
- Limited liability: The members of the Section 8 company have limited liability as per their share subscribed. They are not personally liable for the losses of the company.
- Exemption to the donors: The tax exemption is granted to the donations received by the section 8 company under Section 12A and 80G of the Income Tax Act, 1961.
SECTION 8 COMPANY INCORPORATE ELIGIBILITY
- An Individual, HUF is eligible to start a Section 8 company in India.
- Two or more persons who will act as Directors or shareholders should fulfil all the compliances and requirements of the Section 8 company incorporation under the Act.
- There must be at least one director who should be a resident of India in the Section 8 company.
- The objective must be one or more of the following – promotion of sports, social welfare, the advancement of science and art, education and financial assistance to lower-income groups.
- Founders, directors, members directors of the company cannot draw any remuneration in any form of cash or kind.
- No profit should be distributed among the members and directors of the company directly or indirectly.
FAQs FOR SECTION 8 COMPANY
Q1. How many people are required to register a Private Limited Company?
A minimum of two people is required to register a section 8 company in India.
Q2. What are the requirements to be a Director?
The Director needs to be over 18 years of age and must be a natural person.
Q3. Is an office required for starting a Section 8 Company?
An address in India where the registered office of the Company will be situated is required. The premises can be commercial/industrial/residential where communication from the MCA will be received.
Q4. Do I have to be present in-person to incorporate a Section 8 Company?
No, you will not have to be present at our office or appear at any office for the registration of a Section 8 Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.
Q5. What are the documents required for registration?
- Identity proof and address proof are mandatory for all the proposed Directors of the Section 8 Company.
- PAN Card is mandatory for Indian Nationals.
- In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.
Q6. How long is the registration of the Company valid?
Once a Company is incorporated, it will be active and in existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and may be struck off from the register after a period of time. A struck-off Company can be revived for a period of up to 20 years.
Q7. Can NRIs /Foreign Nationals be a Director in a Section 8 Company?
Yes, a NRI or Foreign National can be a Director in a Section 8 Company after obtaining Director Identification Number. However, at least one Director on the Board of Directors must be a Resident India.
