All you need to know about Rules and Regulations under Section 8 Company Registration
Section 8 Company is a company licensed under Section 8 of the Indian Companies Act, 2013. It is a non-profit organization that is formed to promote science, commerce, arts, education, sports, research and etc. The profit generated out of the operations of the company can be used to meet the objectives of the company. Section 8 Company registration is important and it is registered for social welfare, charity and achieving objectives of the organization towards the society at large. This article will discuss about all you need to know about rules and regulations under Section 8 company registration.
Objective of Section 8 Company
The objective of section 8 company is:
- To promote the art, science, commerce, education, research, social welfare, charity, religion sports, medical aid, financial assistance or appropriate protection of business or legal environment.
- The profit gained from such activities to be used to promote the objectives of the business organization or to achieve the goals of the organization.
- No portion of the profit to be paid to the members of the company.
Rules and Regulations under Section 8 Company Registration
To register a Section 8 Company in India, following rules and regulations are required to be followed:
- The applicant is required to fill an online form available on the official website.
- Next, obtain a Digital Signature Certificate (DSC) along with the Director Identification Number (DIN) within three working days.
- The applicant is required to apply for the Section 8 Company name approval from the Ministry of Corporate Affairs.
- Further, apply for the Section 8 License from the Director of the Ministry of Corporate Affairs.
- Once the Section 8 license is issued by the applicant, then a SPICe+ Form has to be filed for final incorporation with the Registrar of Companies.
- The applicant is required to E- file PAN and TAN application.
- The PAN card of the applicant shall be delivered through courier. Section 8 Company registration shall be complete.
- The applicant can open a bank account within 30 working days
- The Section 8 Company is then required to apply for 80G and 12A registration with the Income Tax Department to get the benefit of exemption from paying tax.
Last name to be added to Section 8 Company
According to the Rule 8 (7) of the Companies act, the companies under section 8 of the act shall include the words:
- Electoral trust
Also, the central government can allow the Section 8 company to be registered as a limited company without using the words- ‘Limited or Private Limited’ to its name.
What are the documents required for Section 8 Company registration?
- Identity Proof of the members of the company.
- Passport size photograph.
- List of the directors and promoters.
- Address proof of the members.
- If the property is on rent, Copy of rent agreement
- No Objection Certificate (NOC) from the Landlord.
- If the property is self-owned then the copy of the papers along with the electricity bill or water bill.
- Signature of the members.
- Memorandum of Association (MOA) and Articles of Association (AOA).
Eligibility criteria: Rules and Regulations under Section 8 Company registration
- The objective should be to promote social welfare, arts, education, science, commerce, sports, research, and financial assistance to the lower-income groups.
- The entire surplus that is generated must be used for meeting the objectives of the company.
- The profit generated should not be distributed between the members and directors of the company directly or indirectly.
- Directors, members and founders of the company cannot withdraw any remuneration in any form, be it, in cash or kind.
- The company must have a clear vision and project plan for the next 3 years.
Statutory Obligations: Rules and Regulations under Section 8 Company registration
- The revenue and surplus generated from the operations of the company should exclusively be used for achieving the objectives of the company.
- It is not mandatory to appoint a Company Secretary for the Section 8 Company. #
- No incentives or commission is allowed in Section 8 Company.
- There is no need to bring minimum share capital in a Section 8 Company.
- The Directors of the company can take a position in more than 20 companies.
- Annual General Meeting (AGM) can be conducted at a short period notice.
- No portion of profits should be paid to the promoters or directors of the Section 8 Company.
- The objective and purpose of Section 8 Company cannot be altered by the company without the prior permission of the Central Government of India.
- The profit is 100% Tax-free if Section 8 Company has obtained 80G and 12A registration from the income tax department.
What is the Advantages of Section 8 Company?
Some of the advantages enjoyed by Section 8 Company are as follows:
- Exemption from paying stamp duty.
- Many privileged and exemptions under company law.
- Donors of the company enjoy the benefit of tax exemption.
- Section 8 Company can be incorporated without any share capital and the funds obtained are usually in the form of donations.
- Shares of the Section 8 Company can be easily transferred.
- Section 8 Company is exempted from keeping any suffix as titles.
Section 8 company is a non-profit organization which is formed to promote social welfare and for a charitable purpose. Its aim is to provide benefits and uplift the impoverished section of society. It works for the society. There is no profit sharing between the members of the Section 8 Company and the profits generated from the operations of the company are utilized for achieving the goals and objectives of the company. It is mandatory to follow all the rules and regulations under Section 8 company registration to get the company incorporated in India.