Procedure for Section 8 Company Registration

In India, an NGO is a Non-Government Organisation that works for non-profitable or charitable purposes. An NGO in India established as Section 8 Company under the Companies Act is governed by MCA whereas the NGO registered as a Society or a Trust is governed by the Registrar of State under the State Government. Section 8 Company Registration has more advantages in comparison to Trust & Society. This Company has more credibility among Government Departments, other stakeholders & donors. In this blog, we will discuss the procedure for Section 8 Company Registration under the Companies Act, 2013.

Benefits of Section 8 Company Registration in India

Once you complete the procedure for Section 8 Company in India, then you can avail all the following benefits:

• No Minimum Capital: You don’t need a specific amount of money to start a Section 8 company. You can adjust your funds as your organization grows, receiving donations and subscriptions later.
• Tax Benefits: Section 8 companies enjoy tax benefits under Section 80G of the Income Tax Act, and they’re not subject to the Company Auditor’s Report Order (CARO).
• No Stamp Duty: You won’t have to pay stamp duty for the company’s paperwork, unlike private or public limited companies.
• Separate Legal Identity: A Section 8 company is legally separate from its members, and even a partnership firm can join as a member without affecting the company’s operations.
• Limited Liability: Members are only liable for the amount they invest, protecting them from personal liability for company losses.
• Credibility: Section 8 companies are highly credible due to mandatory annual audits and a fixed mission, ensuring their commitment to nonprofit objectives.

Eligibility Criteria for the Online Procedure for Section 8 Company Registration in India

Before starting the procedure for Section 8 Company Registration, it is important to know the eligibility criteria. Following is the eligibility criteria for Section 8 Company Registration in India:

1. At least 1 Director is required and he or she should be a resident of India;
2. HUF, an individual is eligible to commence a Section 8 Company in India;
3. The objective of the Company should be one or more of the following – the advancement of science & art, social welfare, promotion of sports/arts, and financial support to lower-income groups;
4. 2 or more individuals who will act as Directors/Shareholders should fulfill all the compliance & requirements of the Section 8 Company Registration under the Companies Act;
5. Directors, founders, and Members Directors of the Company cannot draw any remuneration in any form of cash or kind;
6. No profit should be shared or distributed among the Directors & members of the Company indirectly/directly.

Procedure for Section 8 Company Registration

Following is the step-by-step procedure for Section 8 Company Registration:

Step 1: Obtain DSC & DIN: First, the applicant needs to obtain a Digital Signature Certificate of the proposed Directors. Once they receive DSC, file Form DIR-3 with ROC for obtaining DIN. The identity & address proof should be attached for getting DSC. Once DIR-3 is approved, the Registrar of Companies will allot a DIN to the proposed Directors.

Step 2: Filing of INC-12 Application Form: After getting DSC and DIN, the next step is to file Form INC-12 with the Registrar of Companies to apply for a Licence under Section 8 Company along with the attachment of the required documents. Once the form is approved, a Licence under Section 8 Company will be issued in Form INC-16.

Step 3: Filing of SPICe+ Form: After getting License under Section 8, you need to file SPICe+ Form with the Registrar of Companies (ROC) for the Registration along with the vital documents.

Note: Once the Registrar of Companies is satisfied with the forms submitted, he or she issues a CoI (Certificate of Incorporation) along with a Unique CIN.

What are the Annual Compliances for Section 8 Companies in India?

Following are the annual compliances for Section 8 Company:

1. Mandatory Audit Report;
2. Maintenance of Books of Accounts;
3. ITR filing;
4. Conduct a minimum of 2 board meetings in a year;
5. Preparation of Financial Statements;
6. Filing of financial statements in Form AOC-4;
7. An Annual Return is to be filed every year with other e-filing forms like MGT-7;
8. Additional compliance to fulfil the Registration like 12AA, 80G, etc.

Conclusion

The procedure for Section 8 company registration in India offers a streamlined and accessible path for those with noble intentions. With no minimum capital requirement, tax benefits, no stamp duty, and limited liability, it encourages social and charitable initiatives. The separate legal identity ensures flexibility in membership, while annual audits maintain credibility. This process empowers individuals and organizations to establish entities dedicated to making a positive impact on society. It’s a powerful mechanism for those seeking to contribute to the betterment of our communities, with regulatory support to ensure their nonprofit objectives are fulfilled.