A non-profit organization can be registered as a trust or society and also as an NPO company under section 8 of the companies act, 2013.Section 8 Company has more benefits in comparison to trust and society. Section 8 company is registered for the charitable purpose or for not for profit business. This type of company has more credibility among donors, government departments, and other stakeholders. NGO registration is offline process except the Section 8 Company registration.
Its registration is governed by the Ministry of Corporate Affairs whereas the Trust & Society registration is governed by the registrar of state under the State Government.
For Section 8 Company, It is not required to use words 'LTD' or 'PVT LTD' in their name. With effect from June 5, 2015, under the act, there is no such requirement regarding the minimum capital.
Section 8 company has to comply with the annual compliances like other companies, in case of non-compliance, the company will be treated as a dormant company and it can be struck off from the register.
Here are the following steps required to incorporate a section 8 company
First, Obtain the Digital Signature Certificate (DSC) of all the directors and promoters of the company, in case they don't have the same. For obtaining DSC an application is made to the certifying authority.
Secondly, to obtain the Directors Identification Number(DIN)for all the directors in the company.
For name approval, an application will be filed in Form INC-1 to the registrar of the company. Maximum six names can be provided for the name approval by the applicant. An approved name is valid for the 60 days. It is required for section 8 company to include the words such as foundation, association, forum, council, chambers etc. in accordance with the company, incorporation rules 2014.
After name approval, the next step is to draft MOA & AOA and then it is required to file it to ROC in form INC 12 with other documents for the license under section 8 of the companies act, 2013. The MOA & AOA must be signed by the subscribers of the memorandum.
Form INC 12 is filed with the ROC for the issuance of a license to the section 8 company under the Companies Act, 2013.
With the following attachments:
After approval of the form, the license is issued in Form INC 16.
Incorporation application is filed in form INC 7 along with the following attachments:
Form INC 22 is to be filed for the situation of the registered office of the company along with the following attachments:
For the purpose of appointment of directors form DIR 12 is required to be filed with the following attachment:
Consent to act as a director inform DIR 2.
After satisfying with the forms filed with the ROC, the registrar shall issue the certificate of incorporation along with the unique Company Identification Number.
In case company makes any default in complying with the provisions of this section the company shall be punishable with the fine which shall not be less than ten lakh rupees but which can be extended to rupees one crore and the directors and officer in default shall be punishable with the imprisonment for a term which may extend to three years or fine which shall not be less than twenty-five thousand rupees and which can be extended to twenty-five lakh rupees or both.