Section 8 Company (NGO)
A Non Profit Organisation in India, registered under Companies Act 2013, as Section 8 Company with a non-profit motive. Objective of Section 8 Companies are promotion of arts, commerce, charity, education, protection of environment, science, social welfare, sports, research, religion and intends to apply its profits, if any, or other income in promoting its objects. It functions exactly like a limited company including all the rights and obligations that come with such a company.
However, it differs from a company in one very crucial aspect, i.e. it cannot use the words “Section 8” or “Limited” in its name. Section 8 Company is most popular form of NGO in India. It is easy to register, run or manage.
The income of the Section 8 Company must be used to promote only charitable objects and cannot pay any dividend to the members of the company.
Advantages
TAX EXEMPTION
Numerous Tax exemptions are provided to Section 8 Companies, specifically to the donors who are contributing to Section 8 Companies, they can claim the Tax exemption against the donation they made to a Section 8 company.
CAPITAL REQUIREMENT
There is no prescribed limit over section 8 companies for the minimum capital requirement unlike other entities such as public limited, but the capital structure can be altered at any stage as the required for the growth of the company.
STAMP DUTY
A section 8 Company is exempted for the payment of stamp duty applicable for registration as applicable in case of other structures such as private limited or a public limited company.
SEPARATE LEGAL ENTITY
A Section 8 Company also holds its own identity like other companies structures, and has its own separate legal standing from its member. A Section 8 Company also has a perpetual existence.
CREDIBLE
A Section 8 Company has more credibility as compared to any other Non-profit organization structure be it a Trust or Society. As it is a licensed by the central government. It has more stringent regulations such as no change in MOA and AOA can be done at any stage or situation in a Section 8 Company. A section 8 company due its strict compliances as regard to functioning has a more reliable image in comparison to other legal structures.
TITLE REQUIREMENT
Unlike the names requirements of the private limited or a public limited company, a section 8 company does not require to use a suffix next to its name.
TRANSFER OF OWNERSHIP
The members of private limited company are prohibited to transfer their shares. But in Section 8 Company members can easily transfer the ownership of the company.
Minimum Requirements
- Minimum 2 Shareholders (for Private Limited NGO) and 7 Shareholders (for Public Limited NGO)
- Minimum 2 Directors (for Private Limited Co.) and 3 Directors (for Public Limited Co.)
Get Expert Assistance
Company Registration
Documents Required For Registration
Identity And Address Proof
Aadhar Card, Aadhar number is now a necessity for applying for any registration in India. Also, income tax return can only be filed if the person has linked his PAN card with Aadhar number.
Address proof will be required for all directors and shareholders of the company to be incorporated. For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted. Residence proof documents like bank statement or electricity bill should not be more than 2 months old.
All documents submitted must be valid
Registered Office Proof
- Register office of all companies must be in India .If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.
- Documents submitted must be valid and not more than 2 month old.
Process
Name Approval Application
Name Applications Under RUN Will Be Processed By Central Registration Centre (CRC). The Name Approval Is Subject To Comprehensive Check By The Central Registration (CRC) And Thereafter Approval Or Rejection Shall Be Communicated By E-Mail To The Applicant. The Name Approved Under RUN Process For New Company Registration Is Valid For A Period Of 20 Days From The Date Of Approval. In Case Of Change Of Name Of An Existing Company, The Name Shall Be Valid For 60 Days From The Date Of Approval. RUN Company Name Application Fee Is Rs.1000.00. This Fee Is Additional To The Regular Fee To Be Paid Through SPICE Application For Company Registration. RUN Company Name Application Mandatory Process. Alternatively, The Applicant Can Apply Company Name Through The Integrated SPICE Application For Company Registration. In That Case, We Can Submit ONLY ONE Name For Seeing Approval. However, There Are TWO Changes Of Re-Submissions For SPICE Application. So, Effectively The Applicant Can Submit FOUR NAMES (1-Original Submission + 1 Re-Submissions) For Approval Without Any Extra Cost.
DSC (Digital Signature)
A Digital Signature Is Electronic Signature, Which Is In The Form Of Codes. It Is Used For Signing The Electronic Forms, Filed With ROC For Incorporation Of Company. Digital Signature Cannot Be Used In Physical Documents. The Company Registration In Procedure Is Completely Online And Hence It Requires Digital Signature To Incorporate A Company. It Is Mandatory For Subscribers And Directors To Have A Valid DSC (Class II Or III). You Can Get A DSC From Us In Just One Day. If You Already Have A Digital Signature, Then You Can Use The Same But Check For Its Validity Since Agencies Issues DSC’s With Either One Or Two-Year Validity.
Apply For Din (Director Identification Number)
Director Identification Number Is A Unique Number Which Is Given To Existing Directors Of Incorporated Companies.
Rule 2(D) Of Companies (Appointment And Qualification Of Directors)Rule 2014 Defines Director Identification Number As An Identification Number Which Is Allotted By The Central Government To Any Individual, Intending To Be Appointed As Director Or To Any Existing Director Of A Company For The Purposes Of Identifying As A Director Of A Company.
The Following Points Are The Purpose Of Using DIN
- It’s A Unique Identification Number.
- The Entire Database Of The Director Can Be Found Using DIN
- The Name Of The Director, Address And PAN Number Can Be Found.
- The Past Companies In Which He Had Worked And Present Company In Which He Is Working Can Be Found.
- Once Obtained DIN Number, The Director Can Use The Same For Life Irrespective Of The Company He Works In. A Change In The Company Doesn’t Change The Director Identification Number.
Form Spice (Inc-32) Moa (Inc-33), Aoa (Inc-34), Agile
Form INC-32 Must Be Accompanied By Supporting Documents Including Details Of Directors & Subscribers, Affidavits, Declarations, Identity Proof, Address Proof, MoA And AoA Etc. Once The EForm Is Filed, Its Processed By The MCA’s Central Processing Centre.
If Found Complete Company Would Be Registered And CIN Would Be Allocated. Also DINs Gets Issued To The Proposed Directors Who Do Not Have A Valid DIN. Maximum Three Directors Are Allowed For Using This Integrated Form For Filing Application Of Allotment Of DIN While Incorporating A Company. Once All The 4 Forms Ready With The Applicant, Upload All Three Documents As Linked Form On MCA Website And Make The Payment Of The Same.
- In Respect Of Non-Individual First Subscribers Who Are Based Outside India, Pdf Attachments Of Apostilled MOA And AOA Shall Be Attached With SPICe (INC-32).
- SPICe AoA (INC-34) Has Facility For Adding, Modifying, And Deleting Articles. Thus If Additional Article Is Required, We May Add The Same
- DSC Is Mandatory For All Subscribers And Witnesses In EMoA (INC-33) And EAoA (INC-34). EMoA And EAoA Shall Be Used Only Where The Maximum Number Of Subscribers Do Not Exceed 7. In Case The Numbers Of Subscribers Are More Than 7, MoA And AoA Shall Be Attached Manually To SPICe And DSC Is Not Mandatory In Such Cases.
- Two Resubmissions Are Only Permitted In The E-Form
- SPICe EMoA And EAoA Have To Be Uploaded As ‘Linked Forms’ To SPICe (INC-32).
- The Ministry Of Corporate Affairs (MCA) Has Notified An E-Form Known As AGILE – Application For Registration Of The Goods And Services Tax Identification Number (GSTIN), Employees’ State Insurance Corporation (ESIC) Registration And Employees Provident Fund Organization (EPFO) Registration.
- GSTIN Application Via E-Form AGILE And Mandatory To File INC-35 While Submitting SPICe Form.
- It Is Mandatory To Apply For PAN And TAN For The Proposed Company Along With SPICe Form.
Certificate Of Incorporation
Incorporation Certificate Shall Be Generating With CIN, PAN & TAN. Company Has To Pay The Stamp Duty Irrespective Of The Capital Because Stamp Duty Is State Matter. Companies Act, Has Given Exemptions For The ROC Fees Not For The Stamp Duty With Authorized Capital Of Rs. 10 Lakh Or Below.
Pan & Tan Application
Once You Receive The Certificate Of Incorporation Apply For PAN And TAN As They Would Be Required For Opening A Bank Account. You Can Also Apply For The Same Along With INC-32 At The Time Of Incorporation.
Commencement Of Business (Inc-20a)
EForm INC-20A (Declaration For Commencement Of Business) Is Required To Be Filed Pursuant To Pursuant To Section 10A(1)(A) Of The Companies Act, 2013 And Rule 23A Of The Companies (Incorporation) Rules, 2014.
As Per New Section Inserted After Section 10 Of The Companies Act 2013, Section 10A Says A Company Incorporated, Having Share Capital Shall Not Commence Its Business Or Exercise Any Borrowing Powers Unless A Declaration Is Filed By The Directors Within 180 Days From Date Of Incorporation Of Company. The Registrar Of Companies That ‘Every Subscriber To The MOA Has Paid The Value Of The Shares Agreed To Be Taken By Him On The Date Of Making Of Such Declaration”
FREQUENTLY ASKED QUESTIONS
No, at least two Members/Promoters are required to incorporate a Section 8 company.
No, only Individual person can become a Director in a Section 8 company.
Resident in India means any person who has stayed in India for a total period of not less than 182 days in the previous financial year.
The name of section 8 company shall include the words Federation, Chambers, foundation, Forum, Association, Confederation, council, and the like etc.
No, words like “Private limited” or “Limited” should not be there in the company name, if it is a Section 8 Company.
No, Dividend or other benefits shall not be given by the Section 8 Company to any of its members.
Yes, you need a minimum of two directors for a section 8 company registration.
Yes, it is necessary to have a non-profit motive to incorporate a Section 8 company.