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As per the Delhi Municipal Corporation (Amendment) Act, 2003.. the properties falling under the Municipal Corporation of Delhi’s jurisdiction are liable…
Section 8 Company Registration
What is Section 8 Company Registration?
A Section 8 Company, as per the Companies Act of 2013 in India, is a form of organization primarily established for promoting charitable objectives such as art, science, education, religion, social welfare, etc. Unlike other companies, Section 8 companies are not formed to generate profits for their members. Instead, any income generated is utilized towards the promotion of its objectives.
Documents Required For Section 8 Company Registration
For Directors/Shareholders
- Aadhaar Card
- Copy of PAN Card
- 2 Passport Sized Photographs
- Address Proof (Bank Statement, Electricity Bill, Telephone Bill).
For Registered Office
- Ownership Proof (House Tax etc.)
- Utility Bill (Electricity Bill, Gas Bill)
- Address Proof (Bank Statement, Electricity Bill, Telephone Bill)
Benefits of Section 8 Company Registration
Being designated as an NPO or Non-profit Organization doesn’t preclude the entity from generating profit or revenue. It simply entails that while the organization can accrue profits, the stakeholders are not entitled to benefit from them personally. Profits cannot be distributed among the stakeholders; instead, all earnings must be directed towards furthering the company’s objectives.
However, specific exemptions and benefits are provided to NGOs or NPOs under section 8 of the Companies Act 2013. Donors contributing to a Section 8 Company are eligible to claim Tax Exemption against their donations.
Advantages of Section 8 Company Registration
Distinct Legal Identity:
A Section 8 Company enjoys separate legal status, distinct from its members. Its legal entity is independent of its members, ensuring perpetual existence, structured operations, and increased flexibility.
Zero Stamp Duty:
Section 8 Companies are exempt from paying stamp duty on both Memorandum of Association (MoA) and Articles of Association (AoA), which is obligatory for the registration of other company structures.
No Minimum Capital Requirement:
There's no stipulated minimum capital requirement for a Section 8 Company in India. Moreover, its capital structure can be adjusted according to evolving needs. This implies that it can be established without any share capital, with funds for operations sourced from donations and subscriptions.
Name:
A Section 8 Company is not obliged to include "Limited" or "Private Limited" in its legal name. It can be registered under titles such as "Foundation, Association, Society, Council, Organization, Club, Charities, Academy, Institute, and Federation.
Tax Benefits:
Several tax benefits are extended to Section 8 Companies in India.
Credibility:
Section 8 Companies are perceived as more reliable than other charitable organizations. They are governed by the Companies Act and are subject to stringent regulations, such as mandatory annual audits and the inability to alter Memorandum and Articles of Association at will.
Donor Exemption:
Donors contributing to a Section 8 Company are eligible for tax exemptions under sections 12A and 80G of the Income Tax Act.
Membership:
A registered partnership firm can become a member in its individual capacity and obtain directorship within the Section 8 Company.
Eligibility of Section 8 Company Registration
The objectives of a Section 8 Company must revolve around the advancement of various fields such as Commerce, Art, Science, Education, Research, Sports, Social Welfare, Religion, Charity, Protection of Environment, or any similar cause. The company aims to utilize its profits or other income towards promoting these objectives and refrains from distributing dividends to its members.
A Section 8 Company is established by individuals who seek not to derive profit from their endeavors but instead aspire to contribute to the enhancement of societal elements.
In addition to the aforementioned conditions, the following criteria must be met for registering as a Section 8 Company:
- Under: Companies Act, 2013.
- License: Application for a license must be submitted to the Ministry of Corporate Affairs.
- Directors: A minimum of “2 Directors for a Private Limited Company and 3 Directors for a Public Limited Company” is required. Additional directors can be appointed after passing a special resolution during a general meeting.
- Indian Resident: At least 1 director must be a resident of India, having stayed in the country for a total period of not less than 182 days in the previous calendar year, as per (Section 149(3)).
- Subscribers to MoA: The Memorandum of Association (MoA) must have at least 2 or 3 subscribers, depending on whether the company is proposed to be incorporated as a private or public company, respectively.
- MoA & AoA: Determination of the company name, objectives, registered office address, number of directors and promoters, authorized capital, and allocation of shares among promoters. A detailed plan outlining the fulfillment of social objectives must be included, subject to scrutiny by the Registrar of Companies (ROC).
- Initial Capital: The proposed initial capital must be invested in the company within 2 months.
- Property Management: Company property ownership is vested in the company’s name and can only be sold following the rules specified under the Companies Act, such as with the consent of the Board of Directors through a resolution.
- Dissolution: The winding-up of a Section 8 Company must adhere to the society’s by-laws. Upon dissolution, after settling debts and liabilities, remaining funds and property are not distributed among members but transferred to another Section 8 Company with similar objectives.
- Annual Compliance: Annual filing of accounts, statements, and returns with the ROC is mandatory to ensure compliance.
- Documents: All directors must possess valid Director’s Identification Numbers (DIN) and Digital Signature Certificates (DSC).
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