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A company is referred to as a Section 8 Company when registered as a Non-Profit Organization (NPO) i.e. when it has the motive of promoting arts, commerce, education, charity, protection of the environment, sports, science, research, social welfare, religion and intends to use its profits (if any) or other income for promoting these objectives.
The income of NPO can not be used for paying out dividends to the company’s members and has to be for the promotion of charitable objectives. Such companies obtain an incorporation certificate from the central government and are liable to adhere to the rules specified by the government.
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According to the rules, failure to comply with the responsibilities stated by the Central Government may lead to the company’s winding up on the government’s orders. Besides, strict legal action will be taken against all the members of the company if the objectives laid down by the company prove to be bogus.
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Its manner of carrying out the operation is similar to any other limited company and even the rights & duties of a limited company and NPO are alike.
However, the titles of “Section 8” and “Limited” can not be interchanged.
An individual or an association of individuals are eligible to be registered as a Section 8 Company if it holds the below-mentioned intentions or objectives. The objectives have to be confirmed to the satisfaction of the Central Government.
Companies Act, 2013 deals with the procedure of Incorporation of a Section 8 Company and as per this section, an application in Form No. INC.12 has to be submitted along with the below-mentioned documents to the Registrar of Companies.
Form no. INC – 13 – Company’s Draft Memorandum of Association (MOA) and Articles of Association (AOA) in Form No. INC – 13 (as specified in Act) along with the affixation of subscribers’ photographs.
Form no. INC-14 – A Declaration is to be affixed in Form no. INC-14 that the draft MOA & AOA are compliant with the provisions & norms of Section 8 and the requirements as per Section 8 have been duly taken care of.
Note: The declaration has to be made on stamp paper & should be notarized by an Advocate, a Company Secretary, a Chartered Accountant or a Cost Accountant, practising the profession.
Form no. INC-15 – A declaration in Form No. INC-15 on stamp paper & notarized by each member of the company who is applying.
Form no. INC-9 – Form no. INC-9 form first directors as well as each subscriber, on the relevant State’s stamp paper and appropriately notarized.
An estimation of the company’s future annual income and expenditure for the next three years, mentioning the sources of the income and the purpose of the expenditure.
Companies (Incorporation) Sixth Amendment Rules, 2019 dated 7th June 2019 to ease the Incorporation process has knocked off the need for filing Form no. INC 12, which was initially needed.
This amendment has made the Process of Incorporation of Section 8 Companies as easy & simple as that of other companies.
Section 8 Companies can be incorporated by reserving names in part A of Spice+ followed by part B of the Spice+ form or by directly filing Spice+. License No. shall be given to the section 8 company during the incorporation.
Stakeholders having License Numbers already before the filing of the SPICe form may file the form at their ease. However, one thing should be noted form processing takes time to let the workflow changes be effective.
Companies Act 2013:
Section 149(1) of the Companies Act 2013 – prescribed a minimum of 3 & 2 directors for public limited & private limited companies respectively and a maximum of 15 directors.
But there is no minimum or maximum prescription for Section 8 Company.
The second proviso to section 149(1) – prescribes a woman director in a specified class of companies.
Section 149(3) of the Companies Act 2013 – prescribes resident directors in every company.
Section 165 of the Companies Act, 2013 – says Directorship in Section 8 Companies will not be summed up when the total number of directorships will be calculated i.e. it will not be counted while adhering to the maximum limit of twenty Directorship as prescribed in the Act.
Section 149(1) of the Companies Act, 2013 – vide exemption notification dated June 05, 2016, stated that Section 8 Companies are not under obligation to appoint an independent director and are free from all the consequential provisions concerned with Independent directors.
Under Section 149(3) – Section 8 company must have a minimum of one Resident Director i.e. a director who has resided in India at least for a total period of 182 days (one hundred and eighty-two days) or more within the previous calendar year.
As per the exemption notification read with sections 173(1) and 174(1), Section 8 companies must have at least one meeting within 6 calendar months and the quorum for its board meetings is 8 directors or 1/4th of its total strength, whichever is less, respectively. However, the quorum should have a minimum of at least two members.
Here is a list of Monthly, quarterly and annual compliance for section 8 Company under MCA (Ministry of Corporate Affairs)
Besides the list of compliance specified above, a Section 8 company might need to function additional compliance chores depending on the situation.
(Mandatory = Employees who draw less than Rs. 15000/- per month.
Optional = Employees if draws more than Rs. 15000 per month with permission of Assistant PF Commissioner).
Q.1 – Is there any limitation upon a Section 8 Company from doing the investments, furnishing the loans, guarantees, etc to other Companies?
Yes, Section 8 firm would furnish the loans or guarantees or furnish security associated with the loan or procure through the method of subscription, purchase, etc. the securities of the company but the same must comply within section 180, 185, Section 186, and other sections, whatsoever relevant, of the Companies Act, 2013.
Q.2 – If the accounting standards are subjected to apply on the section 8 company?
Yes, there is no exemption furnished towards section 8 companies.
Q.3 – “Charitable Purpose” meaning with provisionals and sections pertaining 2(15) of the Income Tax Act, 1962?
As per Section 2(15) of the Income Tax Act, 1961, “charitable purpose” includes relief of the poor, education, medical relief, preservation of the environment along with the watersheds, forests and wildlife along with the upgraded of the additional object of the general public utility.
Q.4 – Does Section-8 Company subject towards any exemptions/ reliefs from payment/applicability of excise duty, service tax, customs duty, deduction of tax at source, collection of tax at source, and others?
No particular privilege shall be available towards Section 8 company towards the above-prescribed acts.
Disclaimer:- “All the information given is from credible and authentic resources and has been published after moderation. Any change in detail or information other than fact must be considered a human error. The blog we write is to provide updated information. You can raise any query on matters related to blog content. Also, note that we don’t provide any type of consultancy so we are sorry for being unable to reply to consultancy queries. Also, we do mention that our replies are solely on a practical basis and we advise you to cross verify with professional authorities for a fact check.”
32 thoughts on “How to Do Registration for Section 8 Company? New Guide”
I want to register from Maharashtra
The article is really helpful.
Can a state government officer be appointed one of the directors for the company registered us 8?
Please contact any practising professional
Can we convert a society in to Section 8 company
Any registered society can be converted into section 8 company for detail procedure kindly contact any practising professional
I want to start a section 8 company. Kindly contact
I can help you with Section 8 Company incorporation
Does a Section 8 firm have to pay PTRC and PTEC? Pl advise
Kindly ask any practising ca or any practising professional
Can a section 8 company install a factory and produce items to sell in the market.
I am an Indian citizen and partnering with a Europe based Foundation (non-profit) to incorporate a Section 8 company.
1. Can the director of the Europe based Foundation be a representative of the newly forming Section 8 company in India?
2. Can the foreign director (representative of Europe based Foundation) transfer amounts from Foundation to the newly forming Section 8 (after incorporation) – 1. Initial subscription; 2. Subsequent amounts? Does it require FCRA or some other registrations/licenses?
3. How difficult or cumbersome is to get 12AA and 80G, as I heard that the Indian Govt. is not encouraging and not issuing 80G registration from the market?
4. I have been given to understand that FCRA cannot be obtained unless Section 8 company completed 3 years. In which case, how can the newly formed Section 8 company obtain funds from abroad? What options does Section 8 company have? Can ad-hoc permissions be obtained from the Indian Govt. for the inflow of foreign fund transfers?
IF YOU PLAN FOR SECTION 8 COMPANY FOR PROMOTING CSR, KINDLY REPLY
Very good information, I m going to start soon.
Thanks
Sir, i want to register section 8 company, can i get the list of attachments and format of the same
Sir your information is very good
Sir me section 8 company banana chahtahu
I am CEO of a charitable trust, Gemmological Institute of India (GII), Mumbai. Is it possible to convert GII into a section 8 company?
YES, IT CAN BE CONVERTED
is there any precedent case law on conversion of charitable trust into sec 8 company
Could Section 8 company be a listed company for its Welfare Products ?
Please contact to GST practitioner.
I want to registration section 8 company
Can do Gold loan business in section 8 a companies?
NO
Please contact to the Practicing Professional.
Where we can get complete rules regarding section 8 companies?
SIR, I NEED A LEGAL ADVISOR FOR NIDHI OR MICRO FINANCE COMPANY
Sir, want to register a section 8 company here at Kolkata. But need some clarity, may i have your any communication number or mail id, that we can discuss further.
Total charge of company registration…
What are the maximum changes to register a company under section 8?
Please share fees payable with break up and stages of release of fees
Thanks. I want registration . How can you help me. I m from Assam.
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