SECTION 8 COMPANY
The company incorporated under Section 8 of the Companies Act, 2013 are called Section 8 company. These companies are non profit making companies and these companies are formed ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.
A Section 8 Company is similar to a Trust or Society; A section 8 Company is registered under the Central Government’s Ministry of Corporate Affairs. Trusts and Societies are registered under State Government regulations. A section 8 company has various advantages when compared to Trust or Society like improved recognition and better legal standing. Section 8 company also has higher credibility amongst donors, Government departments and other stakeholders.
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REASONS TO REGISTER A SECTION 8 COMPANY
- Registration: Section 8 Companies are registered under the Companies Act, 2013. Hence, the process for registration and certificate of incorporation for a Section 8 Company is issued by the Ministry of Corporate Affairs, Government of India.
- Name: Section 8 Companies can be registered with names that contain words like Association, Foundation, Society, Council, Club, Charities, Institute, Academy, Organisation, Federation, Chamber of Commerce, Development and more.
- Management: Trusts are managed by Trustees as per a Trust Deed. Section 8 Company does not have the concept of Trustees. Hence, Section 8 Companies are managed by the Board of Directors based on the MOA and AOA of the Section 8 Company.
- Profits: Like a private limited company, a Section 8 Company will also have revenue, expenses, profits and losses. However, in a Section 8 Company the profits can be used only for the charitable purposes only as mentioned in the MOA. These profits can not be distributed among members in the form of dividend or any other form.
- Transferability: The management of a Section 8 Company can be easily transferred from one person to another by altering the changing the composition of Board of Directors. Section 8 Company can also be controlled by shareholders.
- Copy of Pan card of directors and members: PAN Card for Indian Nationals and affidavit for not having pan for foreign nationals
- Identity Proof of directors and members: copy of Passport/ Driving License/ Aadhar Card/ Voter id card
- Address Proof of directors and members : Copy of Electricity Bill/ Water Bill/ Telephone Bill/ Bank Statement (Not older than 2 months)
- Proof of Registered Office: Copy of Electricity Bill/Telephone bill/ Water bill (Any of these documents shall not be more than 2 months old) and NOC from Land Owner to use premises as Registered Office. Rent agreement if rented.
- Digital Signatures of directors and member: Valid digital sign is required for every member and director.
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FREQUENTLY ASKED QUESTIONS
How many people are required to register a section 8 company?
Minimum two persons are required to register a section 8 company in India.
What are the requirements to be a Director?
The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, even foreign nationals can be Directors in a Indian Section 8 Company. However one director must be resident of India.
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 a commercial / industrial / residential where communication from the MCA will be received.
What are the documents required for registration?
Identity proof and address proof is 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.
How long will it take to incorporate a Section 8 Company?
We can incorporate a Section 8 Company for in 10-15 working days. The time taken for registration will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy registration, please choose a unique name for your Company and ensure you have all the required documents prior to starting the registration process.
What is a Digital Signature Certificate?
A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Section 8 Company.