According to the Company Act, 2013 section 8 company refers to if anyone wants to encourage art, science, sports research, education, environment preservation, social welfare, charity, or any other social work that helps upliftment of society, can do it by establishing a section 8 company, and Section 8 Company Registration in India is also mandatory. The sole objective of section 8 company is to encourage non-profit goals. Section 8 Company Registration in India requires a minimum of 2 members on the board. And because of its philanthropic nature, unlike other forms of companies, it is not compulsory to deposit minimum paid-up capital to start a section 8 company in India. NGO Registration can be the best example of the section discussed above. In this article, we will thoroughly discuss section 8 of company registration in India.
Key Features of Section 8 Company Act
- All the profits earned by section 8 companies shall be utilized for only charitable purposes; it shall not be distributed among shareholders of the section 8 companies.
- It is compulsory for section 8 companies to follow the provisions of the company act 2013.
- A Section 8 companies have no permission to make changes in their AOA ( Article of association) and MOM ( Memorandum of association ) without the consent of the Government. Further, they must follow the rules and regulations of GST Laws and IT Laws.
- A section 8 corporation is identical to a section 25 corporation under the old Company Act of 1956. Section 15 firms are now known as Section 8 corporations under the current company law.
- In our nation, all non-profit companies can be registered under section 8 of the company Act, 2013.
Advantages of Section 8 Company Registration in India
There are multi advantages of section 8 company. The following are some advantages of section 8 company registration in India-
A section 8 company enjoys 100% tax subsidies unlike other companies they are free from paying taxes to the government under section 12AA of the IT Act because profit earned by section 8 companies use in a charitable trust, does not go to shareholders’ pockets.
No minimum capital
Section 8 companies do not have any fixed minimum paid-up capital to set up a company, unlike other companies like partnership firms, and limited liabilities companies. Section 8 companies have the power to change their capital according to their growth.
Separate legal entity
Section 8 companies have their own legal identity like other registered companies. These companies enjoy legal power and have their legal standing.
No title required
A section 8 company has the freedom to choose the name for the company as per their satisfaction before registration, like other companies, unlike other companies. Section 8 companies do not need to put affix terms like ‘section 8’ after their name.
Credibility has improved
In terms of compliance and legal standing, a Section 8 Entity is more trustworthy. Such organizations are normally governed by a strict legal framework devised by the relevant authorities. Unlike NGOs and trusts, these organizations must adhere to strict regulations after registration.
Criteria under Section 8 Company Registration in India
- A section 8 company must have at least 1 director in the company
- The motive or goal of section 8 company shall not be changed; it must revolve around the upliftment of science, art, charitable activities, sports promotion, education, and supporting lower-income groups people.
- A Hindu undivided Family can do section 8 company registration in India.
Given below are the most important aspects of the Section 8, Company Act-
If section 8 companies is registered as a private limited company then only 2 boards of directors are required, in the case of a public limited company a minimum of 3 board of directors is required.
Number of members
A section 8 company can have a maximum of 200 members if registered as a private limited company. On the other hand, when registered as a public limited company there is no such limit for section 8 company.
Minimum capital and name
As we have already discussed above there is no minimum paid-up capital required for a section 8 companies to be registered under the company Act, 2013.Unlike other companies, section 8 companies do not need to put affix after their company’s name
Only non-profit organizations are eligible to apply for Section 8 company registration. The MOA and AOA must include the purposes for which they were created. Any profit made by the section 8 corporation is either reinvested in the firm or utilized to further its underlying aims, such as philanthropic causes. Such entities’ profits are not available to their members in any way.
Documents Required for Section 8 Company Registration
- Articles of Association (also known as AOA) and Memorandum of Association (also known as MOA) (MOA)
- The initial director(s), as well as a subscriber(s) make a declaration (Affidavit not required)
- Proof of office location
- Copy of utility bills such as electricity, water, or gas bills Copy of a foreign body corporate certificate of incorporation (COI) (if any)
- The promoter company approved a resolution.
- Nominee Consent (INC–3)
- Identity and residence evidence of nominees and subscribers
- The applicant’s identification, as well as evidence of residence are required.
- Unregistered corporations must file a DSC declaration.
The abovementioned documents are mandatory for section 8 company registration in India.
The Procedure of Section 8 Company Registration in India
Step 1: Obtain DSC from MCA-approved agencies
DSC (Digital Signature Certificate) is a digital signature tool that may be used to sign e-forms and scanned copies of documents. It is mostly utilized by the company’s authorized signatories, such as the director, partners, managing directors, and so on. In this instance, the prospective directors of section 8 corporations must get the DSC in order to sign important documents
Step 2: Fill up the Spice+ Form on the MCA portal
The next step is to go to the MCA website and create an account. Following that, the applicant must pick the Spice+ form option from the Service area of the home page’s top menu.
Step 3: Submit the Form after uploading the required papers
Upload the above-mentioned essential papers and go to the payment area to pay the usual fees. Once you’ve finished, click the submit button to complete the application submission process.
If your intention is to establish a business for uplifting society, then section 8 companies is the business you can go for. Section 8 Company Registration in India is also mandatory, apart from its mandatory nature, registration also brings some attractive advantages to the company as we discussed above. For section 8 company registration consult an expert. You can reach an expert at bizadvisor.io for registration.
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