What is a Section-8 Company?
A Section-8 Company, also known as a not-for-profit or non-profit organization, is registered under Section 8 of the Companies Act, 2013 in India. These companies are established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other charitable objective.
Steps to Register a Section-8 Company:
- Name Approval: Apply for name availability through the RUN (Reserve Unique Name) service.
- Drafting Memorandum of Association (MOA) and Articles of Association (AOA): Draft MOA and AOA specifying the company’s objectives and governing rules.
- Digital Signature Certificate (DSC): Obtain DSC for all proposed directors.
- Director Identification Number (DIN): Obtain DIN for all proposed directors.
- Filing with ROC (Registrar of Companies): File incorporation documents including MOA, AOA, DSC, DIN, and other required forms with the ROC.
- Certificate of Incorporation: Once the ROC is satisfied with the documents, they will issue a Certificate of Incorporation.
- Obtain PAN and TAN: Apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
- Apply for Section-8 License: After incorporation, apply for a license under Section 8 of the Companies Act, 2013.
- Commence Operations: Start operations as a Section-8 Company.
Constitution of a Section-8 Company:
A Section-8 Company is constituted with:
- Memorandum of Association (MOA) defining its objectives.
- Articles of Association (AOA) specifying its governing rules.A
Why Register a Section-8 Company?
- Tax Benefits: Enjoy tax exemptions available to non-profit organizations.
- Limited Liability: Members have limited liability, protecting personal assets.
- Legal Recognition: Gain legal recognition as a separate legal entity.
- Social Welfare: Contribute to social welfare and development.
Purpose of Registration:
- To legally establish an organization dedicated to charitable activities.
- To avail tax benefits and exemptions available to non-profit organizations.
Documents Required for Registration:
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Digital Signature Certificate (DSC)
- Director Identification Number (DIN)
- Address Proof
- Identity Proof of Directors
- NOC from the landlord (if premises are rented)
- Utility Bills
- Affidavits and Declarations
Forms Required for Section 8 Company Registration
The following forms are required for Section 8 Company registration:
- Form INC-11: This form is used to apply for incorporation of a Section 8 Company.
- Form INC-12: This form is used to provide information about the directors of the company.
- Form INC-13:This form is used to provide information about the subscribers to the Memorandum of Association.
- Form INC-14: This form is used to provide information about the registered office of the company.
- Form INC-15: This form is used to provide information about the Memorandum of Association and Articles of Association of the company.
Forms Required for Section 8 Company Registration
The following forms are required for Section 8 Company registration:
- Form INC-11: This form is used to apply for incorporation of a Section 8 Company.
- Form INC-12: This form is used to provide information about the directors of the company.
- Form INC-13:This form is used to provide information about the subscribers to the Memorandum of Association.
- Form INC-14: This form is used to provide information about the registered office of the company.
- Form INC-15: This form is used to provide information about the Memorandum of Association and Articles of Association of the company.
Annual Compliances of Section 8 Company
Section 8 Companies are required to comply with the following annual compliances:
- File an annual return with the Ministry of Corporate Affairs (MCA): The annual return must contain information about the company’s activities, financial performance, and governance.
- File a statement of accounts and solvency with the MCA: The statement of accounts and solvency must contain information about the company’s assets, liabilities, income, and expenses.
- Get their accounts audited: Section 8 Companies with a turnover of more than ₹ 40 lakhs or capital contribution of more than ₹ 25 lakhs are required to get their accounts audited by a chartered accountant.
- File an income tax return: Section 8 Companies are required to file an income tax return even though they are not taxed on their profits.
Benefits of Section-8 Company:
- Tax Exemptions: Enjoy tax exemptions on income and donations.
- Limited Liability: Members’ liability is limited to their contribution.
- Perpetual Succession: Continuity unaffected by changes in members or directors.
- Legal Recognition: Gain recognition as a separate legal entity.
- Charitable Objectives: Serve society through charitable activities.
FAQ on Section-8 Company:
A: The company must be formed for promoting charitable objectives and not for profit distribution.
A: No, profits cannot be distributed among members. They must be utilized for the company’s objectives.
A: Yes, it can be converted, subject to compliance with legal requirements and approvals.
A: Yes, it is mandatory to obtain a license to operate as a Section-8 Company.
A: Yes, foreign nationals can be directors, subject to compliance with the Companies Act and other regulations.