Registration of Section 8 Company | Process | Documents Required

What is Registration of Section 8 Company

Registration of Section 8 Company under the Companies Act, 2013 as a Non-profit organization. As we all know NPO can be registered as Trust by executing a Trust deed or, As a society under the Registrar of Societies, or, As a non-profit company under Section 8 Company of the Companies Act, 2013.

Registration of Section 8 Company is the most popular form of Non-profit organization that is established for the-

• Promotion of commerce,
• Art,
• Science,
• Sports,
• Education,
• Research,
• Social welfare,
• Religion,
• Charity,
• Protection of environment or any such other related object”.

In layman, a Section 8 company must promote public welfare and the income generated by the company can only be used to support the stated public cause(s) only.

What are the Consequences in case of Non-Compliance is done by Section 8 Companies?

Every Section 8 company needs to follow the compliance levied by Income tax authorities and Registrar of Companies. If the company fails to satisfy the requisite compliance, it can cause heavy penalties up to Rs 1 lakh in a year.

What if the Company gets Registered under Section 80G?

If a Registration of section 8 company under section 80G then the individual or entity donating to the Non-profit company will get a deduction of 50% from their taxable income.

As per the Finance, Act 2020, the amendment was made i.e. With effect from first June 2020, All the existing charitable and religious institutions (including NGOs) which are registered or approved under the following sections-

1. Section 12A

2. Section 12AA

3. Section 10(23C)

4. Section 80G

These are compulsorily required to switch to section 12AB for fresh registration to continue availing exemption under section 10 or 11.

What Annual Compliances are required to be made for Section 8 Companies as per the Companies Act 2013?

Section 8 companies are required to comply with the Annual Docility as per the Companies Act 2013-

• Two board meetings in a year
• Preservation of Books of accounts
• Compulsory audit.
• Income tax return filing.
• Filing AOC-4 and MGT-7
• Registering for 12AB.
• Adoption of financial statement.

Benefits of Section 8 Company

Numerous benefits are provided to Section 8 Company. Few are mentioned below:-

• No Minimum Capital : In the Registration of section 8 company , there are no minimum capital criteria.
• Avail Tax Benefits : Various tax exemptions and compensations are provided to the company as well as to the donors who are contributing to Section 8 Company.
• Exempted From Payment Of Stamp Duty : No stamp duty is required on the Section 8 Company registration as the company is exempted from the payment of stamp duty applicable for registration.
• Separate Legal Identity : Section 8 Company has a separate legal entity as private/public company and has a distinct legal personality from its member.
• Credibility : Section 8 Company has more credibility as compared to any other form of a charitable organization.
• Transfer Of Ownership : Members of Section 8 Company members can easily transfer the ownership of the company.

What are the Checklists to be Considered while Registering a Section 8 Company ?

Following factors are to be considered while registering Section 8 Company :-

• The Company may be registered as a company limited by shares or by Guarantee and not with unlimited liabilities.
• It can be a holding company of another company and can promote another company.
• The company cannot be amalgamated with a company that is not a Section 8 company.
• There must be at least 1 meeting within every six-calendar month.
• Non-applicability of Section 149(1), Section 178 of Companies Act, 2013
• Secretarial Standards are not applicable.
• No proxy by the members.

What are the Documents Required for Registration of Section 8 Companies?

Below-mentioned documents are required for Registration of Section 8 Company :-

• The Articles of Association
• Memorandum of Association
• Declaration by the subscribers and by the directors
• A confirmation for the address of the office
• Two months utility bills copy
• Certificate of incorporation of the Outer Country body corporate [If applicable]
• A resolution passed by the global Company [If applicable]
• A recommendation declared by the promotional Company [If applicable]
• The interest of the directors from other entities [If applicable]
• Nominee’s assent
• Identity proof and residential address of the subscribers and the nominees
• Identity proof and residential address of Applicants
• The Declaration/Resolution of the unregistered companies
• DSC (Digital Signature Certificate)
• Any other document [If required]

Get started with Section 8 company by reaching out to Chartered Accountants on CA in Delhi‘s homepage