Section 8 Company Registration
Elevate Your Business with Section 8 Company Registration!
A Section 8 Company is a form of company that has been incorporated for the purposes of promoting commerce, art, science, education, research, sports, charity and social welfare. The company does not pay dividends to its members. Instead it uses all income from profits etc. in promoting its objects.
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Table of Content
- Section 8 Company Registration - An Overview
- Eligibility Of Section 8 Company Registration:
- FAQs on Section 8 Company Registration:
Section 8 Company Registration - An Overview
In India, a Section 8 Company operates as a non-profit organization focused on promoting areas like arts, education, science, sports, and social welfare. Unlike Trusts or Societies, the profits generated by a Section 8 Company are reinvested into the organization’s objectives rather than being distributed to its members. The registration of a Section 8 Company is handled by the Ministry of Corporate Affairs (MCA), setting it apart from Trusts and Societies, which fall under the jurisdiction of State Government Registrars.
Registering a Section 8 Company through BookMyCompliance.com offers unique benefits compared to Trusts and Societies. The Section 8 structure increases credibility with government bodies, donors, and other stakeholders. At BookMyCompliance.com, our experienced team simplifies the registration process for your Section 8 Company, taking care of everything from documentation to filing and incorporation. We ensure a hassle-free and efficient experience, allowing you to focus on your organization’s mission.
Eligibility Of Section 8 Company Registration:
- Non-Profit Purpose: The company must be established with the intention to promote charitable, educational, social, or other activities beneficial to society. The primary objective should not be for profit-making.
- Minimum Members: A Section 8 Company requires at least two members in case of a private company, and seven members for a public company.
- Directors: The company must have at least two directors (for a private company) or three directors (for a public company). The directors can be individuals or bodies corporate.
- Registered Office: The company must have a registered office address in India.
- Income Criteria: The company should not be formed for the purpose of earning profits. It should reinvest any profits generated for promoting the objectives stated in its memorandum of association (MOA).
- No Distribution of Profits: The profits or income of the company cannot be distributed among its members, directors, or other individuals. Any surplus generated must be used exclusively to further the company’s objectives.
- Incorporation Purpose: The company should not have objectives that conflict with public policy or law.
- Filing Application: An application must be submitted to the Ministry of Corporate Affairs (MCA) for approval, along with the necessary documents, including a detailed memorandum and articles of association (MOA and AOA).
- Financial Documents: The company should present documents like the projected balance sheet, income & expenditure, and sources of income. These help demonstrate that it can operate on a non-profit basis.
FAQs on Section 8 Company Registration
A Section 8 Company is a non-profit organization established under the Companies Act, 2013, with the aim of promoting arts, science, education, sports, charity, or other activities that benefit society. Unlike other types of companies, any profits generated by the company must be reinvested in the organization's objectives and not distributed among members or directors.
• Legal Structure: A Section 8 Company is registered under the Ministry of Corporate Affairs (MCA), while Trusts and Societies are governed by state authorities.
• Accountability: Section 8 Companies follow strict governance and legal procedures, enhancing transparency. Trusts and Societies may not have as formal a governance structure.
• Credibility: Due to its formal registration under the Companies Act, a Section 8 Company carries more credibility, especially with stakeholders and donors.
While a Section 8 Company can generate income, it cannot distribute profits to its members, directors, or other stakeholders. Any surplus must be used exclusively to promote the company's objectives.
• Minimum Directors: Two directors (for a private company) or three directors (for a public company).
• Minimum Members: Two members (for a private company) or seven members (for a public company).
• Non-Profit Objective: The company must be formed with the objective of promoting social welfare, education, charity, etc., and not for profit-making.
Key documents include:
o Proof of identity and address of directors and members
o Proof of registered office address
o Digital Signature Certificate (DSC) for the proposed directors
o Memorandum of Association (MOA) and Articles of Association (AOA)
o Director Identification Number (DIN) for the proposed directors
o Utility bills and NOC from the property owner for the registered office
• Yes, a Section 8 Company must have a registered office address in India, and it must provide proof of the address. This could be owned or rented property, with the proper documents (like a rent agreement and utility bill).
The process typically takes 15-20 days, provided all documents are in order and there are no complications. However, this can vary depending on the complexity of the application and the approval process.
Yes, foreign nationals can be directors or members of a Section 8 Company. However, they must submit the required documents (like a passport) and comply with the relevant laws for foreign directors.
• Section 8 Companies enjoy various tax exemptions under the Income Tax Act, including:
o 80G: Tax deductions for donations made to the company.
o 12A: Income tax exemption for the company’s income, provided it operates solely for charitable purposes.
Yes, Section 8 Companies can raise funds from various sources, including individual donations, government grants, and international funding. The company’s non-profit status and tax exemptions encourage people to donate.
No, a Section 8 Company cannot be converted into a profit-making entity. Its non-profit status is enshrined in its memorandum and articles of association (MOA and AOA). However, if the objectives of the company change, the company can apply to the Ministry of Corporate Affairs (MCA) for deregistration.
Yes, like other companies, a Section 8 Company is required to conduct an annual audit of its financial statements and file annual returns with the Ministry of Corporate Affairs (MCA).
Section 25 Company was the previous term under the Companies Act, 1956, for non-profit organizations. Under the Companies Act, 2013, this is now known as a Section 8 Company, and there is no significant difference in the legal framework—only the name has changed.
Yes, a Section 8 Company can be dissolved if it no longer serves its purpose or if the members decide to wind up the organization. This can be done through the appropriate legal procedures with the MCA.
Many businesses channel their CSR funds to Section 8 Companies due to their credibility, tax-exempt status, and formal legal structure. Companies prefer partnering with Section 8 Companies for transparency and accountability in utilizing CSR funds.
Related Business Registrations
In addition to registration or incorporation, a business may require other registrations depending on the business activity undertaken. Talk to an Advisor to find out registrations your business may require post registration.
