Section 8 Company Registration

In India, there are following 3 legal forms exist for an NGO or Non-Profit Organizations:

  1. Trusts
  2. Societies
  3. Section 8 Companies

A Non- Profit Organisation or Section 8 is a Company which :

  • has in its objects the promotion of commerce, art, science, sports, education,research, social welfare, religion, charity, protection of environment or any such other object;
  • intends to apply its profits, if any, or other income in promoting its objects
  • intends to prohibit the payment of any dividend to its members

Features

  1. Motive of No Profit just service-The companies registered under section 8 of the companies act, cannot distribute profits or assets to its members.
  2. One Resident director- One director of the company must be resident in India. A person is said to be a resident when he stays in India for at least 182 days in the financial year
  3. No Minimum Capital Requirement- No minimum level of capital prescribed, hence a section 8 company can be incorporated with the capital as required by it.
  4. Voting Rights- The voting rights to the members of section 8 company are based on the number of shares, similar to that of any other company.

Laws applicable to an NGO

  1. Trust under Indian Trusts Act, 1882
  2. Society under Societies Registration Act 1860
  3. Section 8 Company under Companies Act, 2013 

Benefits

  • Exemption of Stamp duty for registration
  • Tax deductions to the donors of the Company u/s. 80G of the Income Tax
  • Exemption from requirement of Minimum Paid-up capital
  • Registered partnership firm can be a member in its own capacity

Documents Required

  • Digital Signature Certificate
  • Director Identification Number
  • Memorandum of Association
  • Articles of Association
  • ID proof for members (Aadhar Card, Passport, Voter ID)
  • Passport size Photographs
  • Director’s details (if Members are other Companies/LLPs)
  • Address Proof
  • Self declaration about the director’s directorship in other companies
  • Rent agreement of your registered office
  • No objection certificate from the owner of the property of the property

Application Procedure

  1. First step is to obtain a DSC (Digital Signature Certificate) of the proposed Directors of the Section 8 Company. Once a DSC is received, file Form DIR-3 with the ROC for getting a DIN. 
  1. Documents to attach for DIN/ DSC application:
  • Proof of Identity
  • Address Proof. 
  1. Now once the DIR-3 is approved, the ROC( Registrar Of Companies ) will allot a DIN to the proposed directors. 
  1. File Form INC-1 with the ROC for applying for a company name. A total of 6 names can be applied for in order of preference, out of which one would be allotted, based on availability. 
  1. After approval, file Form INC-12 with the ROC to apply for a licence for the Section 8 company.

Documents to attach with INC-12:

  • Draft MOA (Memorandum Of Association) as per Form INC-13
  • Draft AOA( Articles Of Association)
  • Declaration as per Form INC-14 (Declaration from Practicing Chartered Accountant)
  • Declaration as per Form INC-15 (Declaration from each person making application )
  • Estimated Income & Expenditure for next 3 years.

The subscription pages of the Memorandum and Articles of Association of the company shall be signed by every subscriber along with mentioning his name, address, and occupation, in the presence of at least one witness who shall attest the signature and sign and add his name, address, and occupation. 

  1. Once the Form is approved, a license under section 8 will be issued in Form INC-16. 
  1. After obtaining the license, file SPICE Form 32 with the ROC for incorporation along with the following attachments:
  • An affidavit from all the directors’ cum subscribers – INC-9
  • Declaration of deposits
  • KYC of all the Directors
  • Form DIR-2 with its attachments i.e PAN Card and address proof of the directors
  • Consent letter of all the directors
  • Interest in other entities of the directors
  • Utility bill as a proof of Office address
  • NOC( Non Objection Certificate) in case the premises are leased/rented
  • Draft MOA and AOA

If the ROC is satisfied with the forms submitted, he issues a Certificate of Incorporation along with a unique Company Identification Number (CIN).