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A non-profit company with a Section 8 designation is one that supports sports, education, science, the arts, and charity endeavours. These businesses' profits aren't divided among their members; instead, they're used to further these goals. Understanding Section 8 companies, document requirements, and the company incorporation process are crucial.
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An organisation whose goals are to promote the arts, business, science, research, education, sports, charity, social welfare, religion, the environment, or other comparable activities is classified as a Section 8 company under the Companies Act of 2013. These organisations don't pay dividends to their shareholders; instead, they use their earnings to further their goals.
An organisation formed to support non-profit endeavours like education, social welfare, environmental protection, sports, the arts, charitable giving, and more is known as a Section 8 company. This complies with the 2013 Companies Act provisions.
There are many benefits to incorporating a Section 8 corporation in India, some of which are listed here.
Due to their benevolent use of profits, section 8 corporations that are registered under section 12AA of the Income Tax Act are exempt from 100% of the tax. Given that the earnings made by these kinds of businesses are not subject to taxes, this is a huge advantage.
There is no minimum capital requirement for Section 8 corporations, in contrast to public limited companies. They have more flexibility because they can modify their capital structure in accordance with their growth.
Like other registered companies, Section 8 companies are perpetually incorporated and have their own legal personality. They get greater legitimacy as well as greater independence and legal status as a result.
Because Section 8 corporations must adhere to stringent legal compliance standards, their legal standing is perceived as more credible. Section 8 entities are more trustworthy because, in contrast to NGOs and trusts, they adhere to strict compliance requirements after registration.
Companies under Section 8 are allowed to select any name they like when registering. They are not needed to include "Section 8" to their name, in contrast to other registered constructions.
In India, companies seeking to establish a Section 8 must fulfil specific eligibility requirements.
These requirements for qualifying guarantee that the Section 8 Company works to advance social welfare and advance societal well-being.
Certain legal requirements must be met before submitting an application for India's Section 8 company incorporation process. The following criteria must be met:
In order to function as a private limited company, the Section 8 corporation must have a minimum of two directors. However, in order for the business to function as a public limited company, a minimum of three directors are needed.
The Ministry of Corporate Affairs (MCA) caps the number of members at 200 if the Section 8 Company Act is intended to operate as a private limited company. For Section 8 entities with a corporate structure similar to a public limited company, there is no such cap.
Companies Act of 2013 states that Section 8 corporations are exempt from maintaining a minimum paid-up capital requirement. Furthermore, NGOs that function as Section 8 entities are exempt from having to add words like restricted or private limited to their name.
The only organisations that can register under Section 8 are those with non-profit goals. These objectives, for which the company was founded, must be expressly stated in the Memorandum of Association and Articles of Association. The Section 8 entity's earnings must either be reinvested in the organisation or used for charitable purposes. Members of Section 8 entities are not entitled to any portion of the entities' profits. These regulatory requirements guarantee transparency in the operations of Section 8 firms and their stated goal of advancing social welfare.
To finish the Section 8 company incorporation process in India, the following documents are needed:
You may guarantee quick and easy Section 8 company incorporation procedures by supplying these documents.
Obtaining 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. The DIN can be obtained by completing Form DIR-3, which needs to be submitted with the proposed directors' DSC.
Forms to be used: DIR-3, DSC
The proposed directors must next apply for a Director Identification Number (DIN) after receiving the DSC. The MCA assigns the DIN number, a special identifying number, to people who want to be directors of companies in India.
Forms to be used: DIR-3
The suggested company's name needs to be reserved with the MCA. The name of the Section 8 firm must be original and distinct from any other name already in use. The company name is reserved using Form INC-1.
Forms to be used: INC-1
The next step is to apply for Section 8 Company incorporation once the company name has been authorised. Together with the company's articles of association (AOA) and memorandum of association (MOA), the application for incorporation is submitted on Form INC-32.
Forms to be used: INC-32, MOA, and AOA
Getting a licence for the Section 8 Company is the next step once the incorporation application is accepted. The licence is obtained via Form INC-12. It ought to be submitted with the required paperwork.
Forms to be used: INC-12