Section 8 Company (Non Profit Organisation)

A Section 8 firm is a non-profit organization that is primarily focused on promoting chartable activities in addition to specific fields like sports, science, art, and education. These businesses  profits aren't divided among their members; instead, they're used to further these goals. Either way, they are put to charitable use.

At Mfiling, we offer comprehensive services for Section 8 {Non Profit Organization} company registration. The team of professionals at Mfiling provides professional and hassle-free services to assist you rapidly and effectively form a Section 8 company. To obtain expert assistance for registering your Section 8 Company {Non Profit Organization} in India, get in touch with Mfiling right now.

Definition of Section 8 Company - Companies Act, 2013

An organization whose goals are to promote the arts, business, science, research, education, sports, charity, social welfare, religion, environmental protection, or other similar activities is classified as a Section 8 company under the Companies Act of 2013. Section 8 businesses do not pay dividends to their shareholders; instead, they use their income to further their goals.

Promoting non-profit objectives, such as trade, the arts, commerce, education, charitable work, environmental preservation, sports research, and social welfare, is the primary reason for creating a Section 8 company.

A minimum of two directors are needed to form a Section 8 business, and there is no minimum paid-up capital needed to establish one.

Key Points about Section 8 Company

Non-Governmental Organizations (NGOs) in India may register with the Registrar of Societies or under Section 8 Company of the Companies Act, 2013 as a non-profit organization.

The profits made by section 8 companies are not allowed to be divided among shareholders or used for reasons other than charitable purposes.

Section 8 Companies must adhere to the regulations set forth in the Companies Act of 2013. They have a mandate to uphold books of accounts, submit returns to the Registrar of Companies (ROCs), and adhere to the IT Act and GST.

Changes to the Articles of Association (AoA) and Memorandum of Association (MoA), which are part of the legal documents, need approval from the government.

Benefits of Opening a Section 8 Company in India

Incorporating a Section 8 company in India offers numerous advantages, some highlighted below:

• Tax Exemption: Section 8 companies registered under section 12AA of the Income Tax Act are eligible for a 100% tax exemption, as they their profits for charitable purposes. This is a significant benefit as the profits generated by such entities are non-taxable.

• No Minimum Capital Requirement: Section 8 entities are exempt from the minimum capital requirement, in contrast to public limited companies. They have more flexibility because they can modify their capital structure in accordance with their growth.

• Increased Credibility: Since Section 8 companies must adhere to stringent legal compliance guidelines, their legal standing is seen as being more favorable. Section 8 entities are more trustworthy due to their strict post-registration compliances, in contrast to NGOs and trusts.

• No Title Required: During the registration procedure, Section 8 corporations are allowed to select any name they like.They are exempt from having to add "Section 8" to their name, in contrast to other registered structures.

Eligibility Criteria for Incorporation of the Section 8 Company

Specific eligibility criteria must be met to establish a Section 8 company in India.

• A Section 8 company may be incorporated by an Indian national or a Hindu Undivided Family (HUF).

• The company needs atleast one director.

• The main goal of a section 8 company should be to support education, sports, arts and sciences, humanitarian endeavors, and lower-class people by giving them financial aid.

These eligibility criteria ensure that the Section 8 Company operates to promote social welfare and contribute to the greater goods of society.

Mandatory legal requirements for Section 8 Company

There are some legal requirements that must be satisfied before applying for the section 8 company incorporation procedure in India. The following criteria must be met:

• Numbers of Members:The Ministry of Corporate Affairs (MCA) has set a 200 member cap for the Section 8 Company if it intends to operate as a private limited company. For section 8 entities with a corporate form similar to a public limited company, there is no such limit.

• Number of Directors: If the Section 8 entity wants to function as a Private Limited Company, it must have a minimum of two directors. However, if the organization wants to function as a Public Limited Company, it needs a minimum of three directors.

• Capital Requirement and Name:The Companies Act 2013 exempts Section 8 company from maintaining paid-up capital. Moreover, non-governmental organizations that operate as Section 8 entities are not required to include phrases like restricted or private limited in their name.

• Company's Objects: To be qualified for Section 8 registration, an entity must have non-profit objectives. The objectives for which the company was founded must be expressly stated in the memorandum of association. Members of Section 8 entities are not entitled to any portion of their profits.Only entities with non-profit objectives are eligible for Section 8 registration.

Documents Needed For Section 8 Company Registration

• Articles of Association (AOA) and Memorandum of Association (MOA).

• Declaration by the first director(s) and subscriber(s) (an affidavit is required).

• Proof of the office address, such as a copy of utility bills like electricity, water, or gas bill.

• Copy of the certificate of incorporation (COI) of an overseas corporate body (if any).

• A resolution passed by the promoter company.

• Consent of Nominee.

• Residential and identity proof of nominees and subscribers.

• Applicant's identity and residential proof.

• Digital Signature Certificate (DSC).

• Declaration of unregistered companies.

By providing these documents, you can ensure smooth and efficient Section 8 company incorporation processes.

Section 8 Company Incorporation Process

The following procedures are involved in incorporating Section 8 corporations in India:

Step1: Obtain Digital Signature Certificate (DSC):

Getting a Digital Signature Certificate (DSC) for the intended directors of the Section 8 Company is the first stage. To file documents electronically with the Ministry of Corporate Affairs (MCA), this Certificate is needed. Form DIR-3 is used for obtaining the DIN and should be filed along with the DSC of the proposed director.

Forms to be used: DIR-3, DSC.

Step2: Obtain Director Identification Number (DIN):

After obtaining the DSC, the next step is that the proposed directors must apply for a Director Identification Number (DIN) which is a unique identification number. The MCA assigns the DIN number to people who want to be directors of companies in India.

Forms to be used: DIR-3.

Step3: Reserve the Company Name:

The next step is that the suggested company's name needs to be reserved with the MCA. The section 8 company name should be unique and not be similar to any existing company name.

Forms to be used: DIR-1.

Step4 File the Application for Incorporation:

After the company name is approved, the next step is to apply for Section-8 Company. The application for incorporation is filed in Form INC-3 along with the Company's Memorandum of association (MOA) and Articles of Association (AOA).

Forms to be used: INC-32, MOA and AOA.

Step5: Obtain a License for Section 8 Company:

Once the application for incorporation is approved , the next step is to obtain a licence for the Section 8 Company. Form INC-12 is used for obtaining the license. It should be filed along with necessary documents.

Forms to be used: INC-12.

Step6: Obtain a Certificate of Incorporation:

After obtaining the licence, the MCA issues a Certificate of incorporation in Form INC-16. This certificate confirms the incorporation of the Section 8 Company.

Forms to be used: INC-16.

In the summary, the forms used for Section 8 Company registration are DIR-3, DSC, INC-32, INC-1, MOA, AOA, INC-12,and INC-16.

Donation/ Funding of Section 8 Company

A Section 8 Company may receive donations from the general public but is not permitted to take deposits for capital. There are numerous ways to raise money, including local donations, equity financing, and international donations.

• Foreign contributions are permissible only if FCRA registration is obtained, which can be applied for three years after registration. Professionals of Mfiling are highly committed in providing FCRA Certificate to dedication NGOs.

• Requesting approval in advance from the commissioner may be necessary if emergency foreign donations are needed.

• By issuing fresh equity shares at a higher price, equity funding can be accomplished. There are no limits on domestic subsidies, but a thorough system of money lending prevention must be put in place.

Streamline Section 8 Company Registration with Mfiling

Mfiling is a reliable partner for business owners and organizations seeking to register a Section 8 company (NON PROFIT ORGANIZATION).Mfiling makes the difficult process of registering a Section 8 company easier with our expertise and user-friendly online platform, while also making sure that all legal requirements are satisfied. Our committed team of experts helps clients create non-profit organizations that can engage in charity and social welfare endeavors and walks them through the whole registration process, from documentation to approval.

Reach out to us right now to start the registration process for your Section 8 company {NON PROFIT ORGANIZATION}.

TEAM - MFILING