What is Section 8 Company?
A Section 8 company is a special category of company incorporated under Section 8 of the Companies Act, 2013. These companies are formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, environment protection, or any other similar objects.
Section 8 companies are non-profit entities that cannot distribute profits to their members. Any surplus generated must be applied towards promoting the objectives of the company as mentioned in the Memorandum of Association (MOA).
Key Feature: Section 8 companies enjoy several benefits including tax exemptions, credibility, and legal recognition while maintaining a non-profit status.
Eligibility Criteria for Section 8 Company
To register a Section 8 company, you must meet the following eligibility criteria:
- The company must be formed for promoting charitable or non-profit objectives
- Minimum 2 directors and 2 members are required
- At least one director must be a resident of India
- The company name must reflect its non-profit nature
- Objects clause must clearly state charitable/non-profit activities
- No minimum capital requirement
- Articles of Association must prohibit profit distribution
Pro Tip: Ensure your company's objectives align with the permitted activities under Section 8 to avoid rejection.
Benefits of Section 8 Company Registration
Section 8 companies enjoy numerous advantages that make them attractive for non-profit organizations:
Tax Benefits
- Exemption from income tax under Section 12AA of Income Tax Act
- Eligibility for 80G tax exemption for donors
- No tax on surplus generated from charitable activities
- Exemption from various stamp duties and registration fees
Legal and Operational Benefits
- Legal entity with perpetual succession
- Limited liability protection for members
- Enhanced credibility and trust among stakeholders
- Easier to receive foreign funding with FCRA registration
- Can own property and enter into contracts
- Professional management structure
Regulatory Benefits
- Exemption from adding "Private Limited" suffix
- Relaxed compliance requirements compared to regular companies
- Government grants and funding opportunities
- CSR partnership opportunities with corporates
Section 8 Company Registration Process
The registration process for Section 8 company involves the following steps:
Name Reservation
Apply for name reservation through RUN (Reserve Unique Name) service on MCA portal. The name should reflect the non-profit nature of the company.
Digital Signature Certificate (DSC)
Obtain DSC for all proposed directors. This is required for digital filing of documents with the Registrar of Companies.
Director Identification Number (DIN)
Apply for DIN for all proposed directors who don't already have one. This unique number is mandatory for all company directors.
Section 8 License Application
File application for Section 8 license with the Central Government. This includes detailed project report and financial projections.
Incorporation
After receiving Section 8 license, file incorporation documents (SPICe+) along with MOA, AOA, and other required forms.
Certificate of Incorporation
Receive Certificate of Incorporation from ROC, confirming the legal formation of your Section 8 company.
Required Documents for Section 8 Company Registration
The following documents are required for Section 8 company registration:
For Directors and Members
- PAN Card of all directors and members
- Aadhaar Card of all directors and members
- Passport size photographs
- Address proof (electricity bill, bank statement, etc.)
- Professional qualification certificates (if applicable)
- Consent to act as director (Form DIR-2)
For Registered Office
- Registered office address proof
- Rent agreement (if rented) or ownership documents
- NOC from owner (if rented)
- Utility bills of registered office
Company Documents
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Detailed project report
- Financial projections for 3 years
- Declaration by first directors
- Professional certificate from CA/CS
Annual Compliance Requirements
Section 8 companies must comply with the following annual requirements:
Mandatory Filings
- Annual Financial Statements
- Board's Report
- Annual Return (Form MGT-7)
- Filing of financial statements (Form AOC-4)
- Annual filing with income tax department
Board Meetings
- Minimum 4 board meetings per year
- At least one meeting in each quarter
- Gap between two meetings should not exceed 120 days
- Maintain proper minutes of meetings
Annual General Meeting
- Conduct AGM within 6 months of financial year end
- Present annual accounts and board's report
- Appoint/reappoint auditors
- Pass necessary resolutions
Section 8 Company Registration Fees
The fee structure for Section 8 company registration includes:
Government Fees
- Name Reservation (RUN)₹1,000
- Section 8 License Fee₹500
- Company Incorporation (SPICe+)₹500
- DIN Application (per director)₹500
- Total Government Fees (approx.)₹3,000-4,000
Note: Professional service fees may range from ₹15,000 to ₹25,000 depending on the complexity and service provider.
Common Mistakes to Avoid
Avoid these common mistakes when registering a Section 8 company:
- Unclear or inappropriate company objectives in MOA
- Inadequate financial projections in the project report
- Not obtaining proper registered office documents
- Incomplete or incorrect director details
- Missing professional certificates and approvals
- Not understanding ongoing compliance requirements
- Choosing inappropriate company name
- Insufficient documentation of charitable activities
Expert Tip: Engage experienced professionals to ensure proper documentation and compliance with all legal requirements.
Need Help with Section 8 Company Registration?
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