Section 8 Company Registration

In India, a Section 8 Company functions as an NGO dedicated to advancing various fields such as art, science, education, sports, and charitable activities. Unlike Trusts or Societies, profits generated by Section 8 Companies are reinvested to support their stated objectives rather than being distributed to company members. The registration process for a Section 8 Company falls under the jurisdiction of the Ministry of Corporate Affairs (MCA), distinguishing it from Trusts and Societies, which are governed by State Government Registrars.
Opting for Section 8 Company registration through RegisterKaro offers distinct advantages over Trusts and Societies. The Section 8 structure enhances credibility with government departments, stakeholders, and potential donors. At RegisterKaro, our proficient team ensures a seamless registration process for your Section 8 Company. With expertise in documentation, application filing, and efficient incorporation, we alleviate your concerns, making the entire process smooth and effective.

Important Points Regarding Section 8 Company in India

Following are some vital points about Section 8 Company in India:

1. NGOs in India can be registered under the Registrar of Societies or as a Non-Profit entity under Section 8 Company of the Companies Act, 2013
2. Compliance with the Companies Act is compulsory for Section 8 Company, including Filing returns with the ROCs, maintaining books of accounts, & complying with GST and IT Act Regulations
3. Section 8 Company in India cannot utilize profits for purposes other than charitable objectives & cannot distribute them among shareholders of the Company
4. Any alterations to the Charter Documents like AoA & MOA require consent from the Government
5. Section 8 Companies are identical to the former Section 25 Companies Under the Companies Act 1956 and now, they are recognized as such under the prevailing legislation

Advantages of Section 8 Company Registration in India

The following are the advantages of Section 8 Company Registration in India:

1. Separate Legal Entity:

These types of companies in India are considered separate legal entities, which means that they can own property, sue or be sued in their name, and enter into contracts.

2. More Trustworthy & Credibility:

Due to its non-profit nature, Section 8 Companies are often viewed as more credible & trustworthy than other types of Companies.

3. Nil Stamp Duty:

These Companies are exempted from paying stamp duty on their Registration Documents.

4. Minimum Share Capital:

These companies don’t have any minimum capital requirements.

5. No Minimum Capital is Required:

In India, Section 8 Companies do not have a minimum capital requirement and they can adjust their capital structure as per their growth and give them more flexibility.

6. Exemption to Donors:

Tax exemption is only allowed for the donations received by the Section 8 Company under Section 12A & 80G of the Income Tax Act.

Eligibility Criteria for Section 8 Company Registration in India

Following is the eligibility criteria for Section 8 Company Registration in India:

•  At least 1 Director is required and he or she should be a resident of India
•  HUF, an individual is eligible to commence a Section 8 Company in India
•  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
•  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
•  Directors, founders, and Members Directors of the Company cannot draw any remuneration in any form of cash or kind
•  No profit should be shared or distributed among the Directors & members of the Company indirectly/directly

Requirements for Section 8 Company Registration

Following are some vital requirements for Section 8 Company Registration:

1. Directors:

For Section 8 Company Registration in India, a minimum of 2 Directors is required.

2. Capital Requirement:

There is no minimum paid-up capital for the Registration of Section 8 Company. NGOs in India established as a Section 8 company need not use the words Private Limited or Limited in their name.

3. Management

Section 8 Company is managed by the BoD (Board of Directors) as per AoA & MoA of the Company, unlike other Trusts that are handled by the Trustees as per the Trust Deed.

4. Regulation under various Acts:

Section 8 Company needs to follow the Rules & Regulations prescribed under the Companies Act, 2013. It needs to file returns & maintain Books of Account with ROCs. Section 8 Company can’t make any alterations to the provisions of the Memorandum of Association (MoA) & Articles of Association (AoA) without prior consent of the Central Government and it should follow the provisions of the GST Law & Income Tax Act.

5. Charitable Objects:

In India, Section 8 Companies are registered with non-profit objectives. The AoA & MoA must mention the purpose for which it is set up. Any profits earned by the Section 8 Company are utilized for the furtherance of its main objectives i.e., charitable purposes in the Company. The profits will not be distributed among its members.

6. DSC and DIN:

DSC or Digital Signatures of all the proposed Company’s Directors are necessary for the Registration because the forms for the Registration process are filed online & should be digitally signed. Apart from DSC, you need to apply for DIN for the Directors and the application for allotment of DIN must be filed in Form DIR-3 or along with the SPICe+ Form for the Registration.