Register a Section 8 Company

Introduction to Section 8 Company Registration

A non-profit organization can be established through Section 8 Company Registration in India as a legal procedure. The central purpose of a Section 8 company is promoting commerce, art, science, education, research, social welfare, religion, charity, or environmental protection. Within the framework of Section 8 companies, members cannot receive profit because funds are reinvested into the company.

What is Section 8 Company?

Under the Companies Act 2013, a Section 8 company operates as a non-profit business entity. The organization exists to organize charitable events as part of its mission while operating without earning profits. Companies established for non-profit purposes receive tax exemption benefits from the government for their support of noble objectives.

Purpose of an NGO or NPO

A Section 8 company operates with the purpose of producing social good instead of focusing on financial gain. Such organisations dedicate themselves to societal welfare initiatives together with community-building projects and public welfare programs. Their objectives often include:

• Promoting education and literacy programs: Helping underprivileged children and adults gain access to quality education, vocational training, and skill development

• Supporting healthcare and medical relief efforts: Providing free or affordable healthcare services, running medical camps, and assisting in public health awareness campaigns

• Encouraging sports, arts, and cultural programs:  Promoting talent, preserving heritage, and creating opportunities for individuals in sports, music, dance, and other cultural fields

• Environmental conservation initiatives: Conducting tree-planting drives, waste management projects, and climate change awareness campaigns to protect nature

• Rural development and poverty alleviation: Working on clean water supply projects, employment generation, and women empowerment programs to uplift rural communities

Every Section 8 company aims to serve a greater purpose. Bringing meaningful change to society while operating within the legal framework set by the government.

Benefits of Section 8 Company Registration

• Tax Exemptions: A Section 8 company can benefit from tax exemptions because of the Income Tax Act 1961. Donations made to such organisations support deductions according to Section 80G. Donors also benefit from tax exemptions by claiming deductions for their donations, which lowers their taxable income.
• Limited Liability: The personal assets of members and directors remain out of reach from their company debts. Members of Section 8 companies are only responsible for the losses of capital they initially invested, thus maintaining personal financial safety.
• Separate Legal Identity: A Section 8 company obtains its own individual legal recognition from the government. A Section 8 company possesses its own identity to own property while also having the capability to sign contracts together with the power to initiate legal proceedings in its corporate name. The survival of the organisation remains intact if its founders move away from their position.
• No Minimum Capital Requirement: Companies that operate as Section 8 entities do not need any specific minimum starting capital to implement their business operations. The establishment funds can start at any quantity while the organisation gathers donations paired with grant money according to its needs.
• Credibility and Trustworthiness: The Ministry of Corporate Affairs (MCA) performs oversight of all Section 8 companies. MCA monitoring establishes their legal status, which decreases barriers when trying to raise funds from donors, government organisations, and the common public.

What is Section 8 Company Act?

A Section 8 company must follow several laws to ensure legal compliance and smooth operations. These regulations govern its formation, taxation, and financial transactions

Companies Act, 2013

• Defines the registration, structure, and governance of Section 8 companies.
• Mandates that profits be used for charitable purposes and not distributed as dividends.

Income Tax Act, 1961

• Provides tax exemptions under Sections 12A and 80G for eligible NGOs.
• Regulates tax deductions for donors contributing to a registered Section 8 company.

Foreign Contribution Regulation Act (FCRA), 2010

• Governs the acceptance and utilisation of foreign funds.
• Requires prior approval and registration with the Ministry of Home Affairs.

Goods and Services Tax (GST) Act, 2017

• Mandates GST registration if annual turnover exceeds the prescribed limit.
• Determines tax liabilities based on the nature of services or goods provided.

Eligibility Criteria and Requirements to Register a Section 8 Company

To register a Section 8 company, applicants must meet specific eligibility criteria and follow legal regulations. Here’s a breakdown of the key requirements:

• Minimum of Two Directors: A Section 8 company must have at least two directors to operate legally.
• One Indian Resident Director: At least one director must be a resident of India, ensuring compliance with national regulations.
• No Profit Distribution: The company cannot distribute profits among its members. All earnings must be reinvested to achieve the company’s social or charitable objectives.
• Section 8 License Before Incorporation: Before registration, the company must obtain a license under Section 8 of the Companies Act, 2013, from the Ministry of Corporate Affairs (MCA). This confirms its not-for-profit status.
• Compliance with Tax and Financial Regulations: The company must follow tax laws, maintain proper financial records, and adhere to Income Tax Act provisions, including Sections 80G and 12A for tax exemptions.

Forms Required for Section 8 Registration

To register a Section 8 company, several forms must be submitted to the Ministry of Corporate Affairs (MCA). Each form serves a specific purpose and ensures compliance with legal requirements. Below is a detailed overview of the necessary forms:

• SPICe+ (INC-32): Used for incorporating the company. It integrates various services like name approval, incorporation, PAN, and TAN application.
• INC-12: Required to apply for a license under Section 8 of the Companies Act, 2013. The company needs this license to operate as a non-profit entity.
• INC-13: This form contains the Memorandum of Association (MOA), which defines the company's objectives and purpose.
• INC-14: A practicing chartered accountant, company secretary, or cost accountant must sign this declaration, confirming that the company meets all legal requirements.
• INC-15: This declaration is signed by the directors and subscribers of the company, stating their commitment to the company's non-profit objectives.

Section 8 Company Registration Documents

• PAN and Aadhaar of directors
• Digital Signature Certificate (DSC)
• Director Identification Number (DIN)
• Memorandum of Association (MOA)
• Articles of Association (AOA).
• Address proof of the registered office
• NOC from the property owner

Section 8 Company Registration Process

A Section 8 company requires registration through a defined set of steps. Careful completion of every step is essential to achieve smooth approval throughout the registration process of a Section 8 company. The registration process consists of the following steps:

Get a Digital Signature Certificate (DSC):

The first step is to obtain a Digital Signature Certificate (DSC) for the company directors. Since all registration is done online, DSC is required for signing documents electronically. To get a DSC, directors must submit identity, proof of address, and a passport-size photo.

Apply for a Director Identification Number (DIN):

Each director must have a Director Identification Number (DIN) before company registration. The Ministry of Corporate Affairs (MCA) issues this unique number, which is required for anyone who wants to be a director. The DIN application is submitted through the SPICe+ form.

Get Name Approval Using RUN Service:

The company name must be unique and related to its purpose. The Reserve Unique Name (RUN) service allows applicants to check availability and request approval from the MCA. If the proposed name is rejected, a new name must be submitted

Prepare MOA and AOA: 

A company determines its operational guidelines and organizational objectives through a Memorandum of Association (MOA) and Articles of Association (AOA). The required documents have to fulfill the regulations of the Section 8 company. A legal expert prepares these documents because they need to follow Section 8 Company regulations

Submit the SPICe+ Form for Incorporation:

Once all documents are ready. The SPICe+ (INC-32) form is filed online. This form includes multiple registrations, such as company incorporation, PAN, TAN, and GST registration. The application must include supporting documents like MOA, AOA, and director details.

MCA Approval and Issuance of Certificate of Incorporation: 

The MCA analyzes every application that reaches their facility after submission. If all details are correct. The company obtains its certificate of incorporation and receives its corporate identification number (CIN). At this official step, the Section 8 company gains registration by MCA. The registration validates the company for business operation commencement.

Time Required for Section 8 Registration

Section 8 Company Registration Fees

Post-Registration Compliance

After registering a Section 8 company, businesses must follow several legal and financial obligations to remain compliant.

Annual Filing with ROC (Registrar of Companies):

• Section 8 companies need to submit their annual reports along with financial documents to the Registrar of Companies (ROC).
• Every Section 8 company must submit to the Registrar of Companies both AOC-4 financial statements along with the annual return presented through MGT-7. 
• The company must file annual Income Tax Returns (ITR) with the Income Tax Department.
• A qualified chartered accountant must audit the company’s financial records.
• If the company is registered under GST, it must file regular GST returns and maintain tax records.
• The company must maintain records such as meeting minutes, financial reports, and member registers.

Penalty for Non-Compliance

Non-compliance with regulatory requirements can lead to penalties:

• License Revocation
• Fines ranging from ₹10,000 to ₹1,00,000
• Legal action against directors

Why Choose Agile Regulatory?

Agile Regulatory makes Section 8 company registration simple and stress-free. Our team of experts ensures a smooth process from start to finish.

• Our company offers simple guidance about essential legal criteria through expert advice. 
• The expert staff at Agile Regulatory manages all documentation requirements. It minimizes errors and prevents delays in operations
• The registration process gets shortened through fast-track registration to help you achieve speedy company establishment.
• Our company provides reasonably priced services that include no extra charges.