Registering a Section 8 company in India is a systematic process governed by the Ministry of Corporate Affairs (MCA). A Section 8 company is primarily formed for promoting charitable objectives such as commerce, art, science, sports, education, research, social welfare, religion, charity, and environmental protection. Unlike other companies, it does not aim to generate profits, and any income or profits are reinvested in the companyās objectives. Hereās a comprehensive guide on how to proceed with Section 8 company registration.
Understanding Section 8 Company Registration
Section 8 company registration refers to the process of incorporating a non-profit organization under Section 8 of the Companies Act, 2013. This type of company enjoys certain exemptions from tax and other benefits due to its non-profit nature. The key characteristics include no distribution of profits to members, mandatory use of income for promoting charitable objectives, and strict adherence to MCA regulations.
Prerequisites for Section 8 Company Registration
Before initiating the Section 8 company registration process, ensure the following prerequisites are met:
- Minimum Directors and Members: At least two directors for a private limited company and three for a public limited company.
- Registered Office Address: A valid address proof where official communications can be sent.
- Charitable Objectives: A clear outline of the companyās objectives aligned with Section 8 requirements.
- Digital Signature Certificate (DSC): For all proposed directors to sign electronic documents.
- Director Identification Number (DIN): Required for all directors.
Step-by-Step Process of Section 8 Company Registration
1. Obtain Digital Signature Certificate (DSC)
The first step in Section 8 company registration is acquiring DSCs for the proposed directors. This is essential for signing electronic documents submitted to the MCA.
2. Apply for Director Identification Number (DIN)
Next, apply for DIN through the SPICe+ form on the MCA portal. Existing DIN holders can proceed to the next step.
3. Name Reservation Using SPICe+ Part A
File the SPICe+ Part A form to reserve a unique name for your company. Ensure the name reflects the companyās charitable purpose and complies with MCA guidelines.
4. Drafting the Memorandum and Articles of Association (MOA & AOA)
Prepare the MOA and AOA, outlining the companyās objectives, rules, and regulations. For Section 8 company registration, these documents should emphasize the non-profit nature of the organization.
5. Filing SPICe+ Part B
Once the name is approved, complete the SPICe+ Part B form. This comprehensive form covers:
- Incorporation details
- Director and subscriber information
- Registered office address
- Capital structure
- Declaration by professionals
6. Submission of Required Documents
Upload the following documents along with the SPICe+ form:
- MOA and AOA
- Declaration by directors and subscribers (INC-9)
- Affidavit confirming compliance with Section 8 provisions
- Identity and address proof of directors and members
- Proof of registered office address
7. Payment of Fees and Stamp Duty
Pay the prescribed fees and applicable stamp duty. Section 8 companies enjoy certain fee exemptions, but stamp duty may vary by state.
8. Issuance of License Under Section 8
After document verification, the MCA issues a license under Section 8 of the Companies Act, 2013. This license is mandatory for completing the Section 8 company registration.
9. Certificate of Incorporation
Upon approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, officially recognizing your Section 8 company.
Post-Registration Compliance
After successful Section 8 company registration, adhere to the following compliance requirements:
- Annual Filings: Submit financial statements and annual returns to the ROC.
- Maintain Statutory Registers: Keep updated records of members, directors, and other statutory documents.
- Conduct Board Meetings: Hold regular meetings as per the Companies Act.
- Tax Exemptions: Apply for 12A and 80G certifications for tax benefits.
Benefits of Section 8 Company Registration
- Tax Benefits: Eligible for various tax exemptions under the Income Tax Act.
- Credibility: Enhanced trust and credibility among donors and stakeholders.
- Limited Liability: Members enjoy limited liability protection.
- No Minimum Capital Requirement: Flexibility in capital structuring.
- Separate Legal Entity: Operates as a distinct legal entity, independent of its members.
Common Mistakes to Avoid
- Incomplete documentation
- Non-compliance with MCA guidelines
- Choosing a name conflicting with existing companies
- Lack of clarity in the companyās objectives
Conclusion
Section 8 company registration is a strategic choice for individuals and groups dedicated to social welfare and charitable causes. By following the outlined steps meticulously, you can ensure a smooth registration process with the MCA. This structure not only provides legal recognition but also opens avenues for tax benefits, credibility, and operational efficiency. Remember, ongoing compliance is crucial to maintain the companyās legal standing and reap the benefits associated with Section 8 company registration.