Section 8 Company Registration: Process, Benefits, Documents, and Compliance

What is a Section 8 Company?

A Section 8 Company is a non-profit organization registered under the Companies Act, 2013, with the primary objective of promoting commerce, arts, science, sports, education, research, social welfare, religion, charity, or environmental protection. Unlike other companies, Section 8 companies do not distribute profits to their members but use them for philanthropic purposes.

Benefits of Registering a Section 8 Company

1. Legal Recognition and Perpetual Succession

A Section 8 Company enjoys a distinct legal identity and continues to exist irrespective of changes in ownership or management.

2. Tax Exemptions

These companies can avail tax benefits under Section 12A and 80G of the Income Tax Act, reducing financial burdens.

3. Limited Liability

The liability of members is limited to their share in the company.

4. Credibility and Trustworthiness

As a registered entity, a Section 8 company gains credibility and attracts donations and grants from various sources, including the government and private institutions.

5. Exemption from Stamp Duty

Section 8 companies are exempted from stamp duty applicable to other companies.

6. Government Schemes and Grants

They can access various government grants and subsidies for social welfare activities.

Section 8 Company Registration Process

Step 1: Obtain Digital Signature Certificate (DSC)

All directors must obtain a DSC to digitally sign registration documents.

Step 2: Apply for Director Identification Number (DIN)

Apply for DIN through the SPICe+ Form for directors who do not already have one.

Step 3: Name Reservation through RUN Form

Submit a Reserve Unique Name (RUN) application to the Ministry of Corporate Affairs (MCA) for name approval.

Step 4: Drafting the Memorandum and Articles of Association

Prepare the Memorandum of Association (MOA) and Articles of Association (AOA), stating the objectives and operational guidelines.

Step 5: Filing SPICe+ Form for Incorporation

Submit the SPICe+ Form along with required documents to the Registrar of Companies (ROC).

Step 6: Issuance of License under Section 8

After verification, the MCA grants a license under Section 8, allowing the company to operate as a non-profit entity.

Step 7: Certificate of Incorporation

Upon approval, the ROC issues a Certificate of Incorporation, along with a Company Identification Number (CIN).

Documents Required for Section 8 Company Registration

For Directors and Shareholders

• PAN Card
• Aadhaar Card
• Passport (for foreign nationals)
• Address Proof (Bank Statement/Utility Bill)
• Passport-size Photographs

For Registered Office

• Rent Agreement (if rented)
• NOC from the property owner
• Utility Bill (not older than two months)

Other Documents

• MOA and AOA
• Declaration by directors (INC-9 and DIR-2)

Annual Compliance for Section 8 Companies

1. Filing of Financial Statements (AOC-4)

Every Section 8 company must file AOC-4 with the ROC, detailing the company’s financial performance.

2. Filing of Annual Return (MGT-7)

MGT-7 must be filed annually, providing details of directors, shareholders, and financials.

3. Income Tax Return Filing

The company must file ITR-7 with the Income Tax Department.

4. Conducting Annual General Meeting (AGM)

A Section 8 company must hold an AGM within six months of the financial year-end.

5. Statutory Audit

Annual audits by a Chartered Accountant (CA) are mandatory to ensure compliance.

Purpose of a Section 8 Company

The core purpose of a Section 8 company is to work towards social, educational, cultural, and environmental welfare without profit motives. It is ideal for NGOs, charities, research institutions, and social welfare organizations.

Frequently Asked Questions (FAQs)

1. Who can form a Section 8 Company?

Individuals, partnerships, or corporate entities can form a Section 8 company with a minimum of two directors.

2. Can a Section 8 Company accept donations?

Yes, Section 8 companies can accept domestic and foreign donations, subject to FCRA regulations.

3. Can a Section 8 Company be converted into a private limited company?

Yes, but MCA approval is required for conversion.

4. Is GST registration mandatory for a Section 8 Company?

GST registration is mandatory if the company’s annual turnover exceeds the threshold limit.

5. How long does it take to register a Section 8 Company?

The registration process typically takes 15-30 days, depending on document verification and approvals.

Conclusion

Registering a Section 8 company is a strategic move for individuals and organizations looking to engage in non-profit activities while enjoying legal recognition and tax benefits. Proper compliance with annual filings ensures the smooth functioning of the company. If you need professional assistance, consulting an expert can simplify the registration and compliance process.