Indian companies play an important role in promoting philanthropic activities such as education, science, art and social welfare. They use their profits or earnings rather for these purposes instead of distributing dividends to members. If you're considering setting up a Section 8 company for NGO registration, it is important to identify a specific charitable purpose that guides your mission.
To register a Section 8 business as an NGO, you must meet certain requirements, including having at least two shareholders and two directors and a registered office in India. The section 8 company registration process includes obtaining a. Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the directors, approval of the company name by the Ministry of Corporate Affairs (MCA), and filing of the Memorandum of Association (MOA) and Articles of Association (AOA) with the Registrar of Companies (Roc). In addition, you must apply for a license under Section 8 of the Companies Act, 2013, which is granted by the Roc.
Identifying Your Cause: Before diving into the registration process, it's crucial to have a clear understanding of the charitable cause your company will support. Whether it's education for underprivileged children, healthcare for the elderly, or environmental conservation, a well-defined cause will guide your company's mission and activities.
Legal Structures: A Section 8 company can be registered as either a company limited by guarantee or a company limited by shares. In the former, members contribute a nominal amount as a guarantee in the event of winding up, while in the latter, the company's capital is divided into shares.
Requirements for Section 8 Company Registration:
- Minimum Members:A Section 8 company must have a minimum of two shareholders and two directors. Shareholders can also be directors, ensuring that even a single person can form a Section 8 company. However, at least one director must be an Indian resident.
Registered Office: You must have a registered office in India to which all communications and notices can be sent. This office address will be used for all official correspondence, including legal notices and communication from government authorities. - Name Approval: The proposed name of your company must be unique and not similar to any existing company or trademark. You can check the availability of the name through the Ministry of Corporate Affairs (MCA) website and reserve it for your company.
- License: You need to obtain a license under Section 8 of the Companies Act, 2013, which is granted by the Registrar of Companies (RoC). The application for the license must be submitted along with the necessary documents. The proposed activities of the company must be for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other similar object.
Registration Process:
- Obtain Digital Signature Certificate (DSC): At least one director must have a DSC, which is used to digitally sign the incorporation documents. The DSC is necessary for filing various forms and documents with the Ministry of Corporate Affairs (MCA) and other government agencies.
- Apply for Director Identification Number (DIN): Directors must obtain a DIN from the Ministry of Corporate Affairs (MCA). The DIN is a unique identification number assigned to individuals who wish to become directors of a company.
- Name Approval: Submit Form INC-1 to the MCA for approval of the company's name. The name should be unique and not similar to any existing company or trademark. The MCA will approve the name if it meets the necessary criteria.
- Incorporation Documents: Prepare and file the Memorandum of Association (MOA) and Articles of Association (AOA) with the RoC. These documents outline the objectives, rules, and regulations of the company and its internal management structure.
- License Application: Submit Form INC-12 along with the necessary documents to the RoC for obtaining the license under Section 8. The application should include details about the company's proposed activities and its intended impact on society.
- Issuance of License: If the RoC is satisfied with the application, they will issue the license, and the company can commence its operations. The license is essential for a Section 8 company to carry out its charitable or not-for-profit activities legally.
Documentation:
- Memorandum of Association (MOA) and Articles of Association (AOA)
- Declaration by promoters
- Copy of the license obtained under Section 8
- Copy of the utility bills of the registered office
Seeking Professional Assistance: Given the complexity of the registration process and the importance of compliance, it's advisable to seek professional assistance from a company secretary or a chartered accountant. These professionals can help ensure that all legal requirements are met and that the registration process is smooth and efficient.
Benefits of Tax with 12A and 80G Registration: Once registered, a Section 8 company is eligible for tax exemptions under Section 12A and 80G of the Income Tax Act, 1961, for donations received and applied towards charitable purposes. This can significantly reduce the tax burden on the company and encourage donors to contribute towards its cause.
Compliance and Reporting: A Section 8 company must comply with various regulatory requirements, such as holding regular board meetings, maintaining proper accounts, and filing annual returns with the Roc. Non-compliance can lead to penalties and even the cancellation of the company's registration, so it's essential to stay compliant with these obligations.
Conclusion
Starting a Section 8 business can be a rewarding journey that allows you to make a significant impact on society. By diligently following the registration process and seeking professional guidance, you can lay a solid foundation for your NGO registration and charity work. It is important to remember that although the process may seem intimidating, it is designed to ensure transparency, accountability and compliance with legal standards. By fulfilling these requirements, you will not only gain the trust of your stakeholders, but also pave the way for a sustainable and efficient organization.
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