Section 8 Company
A Section 8 company, also known as a Section 8 Company under the Companies Act, 2013, is a type of legal entity registered in India specifically for non-profit purposes. Here's a breakdown of key features and benefits of Section 8 companies:
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Documents Required (Generally)
- PAN card, Aadhaar card, address proof, passport-sized photo (for directors and members)
- Proof of registered office address
- MoA and AoA
- Declaration of intent to operate as a non-profit company
Section-8 Company Details
Key Features:
- Non-profit Motive: Established for promoting social welfare, arts, education, religion, charity, environmental protection, or other similar objectives.
- Limited Liability: Protects the personal assets of its members from company debts.
- Separate Legal Entity: The company has a distinct legal identity from its members and can own property, enter into contracts, and sue or be sued in its own name.
- No Profit Distribution: Profits earned by the company cannot be distributed as dividends to members. Profits must be used to further the company’s social objectives.
- Compliance: Needs to adhere to regulations and file reports with the Registrar of Companies (ROC).
Benefits of a Section 8 Company:
- Credibility and Recognition: A Section 8 structure offers a credible and recognized legal form for non-profit organizations, potentially attracting grants and donations.
- Limited Liability Protection: Protects members’ personal assets, encouraging them to participate in social initiatives without risking their finances.
- Tax Exemptions: May be eligible for tax benefits on donations and income received for charitable purposes.
Registration Process for a Section 8 Company:
- Minimum Members: Two members (shareholders) and two directors are required to form a Section 8 company.
- Director Identification Number (DIN): Each director needs a DIN, a unique ID issued by the Ministry of Corporate Affairs (MCA).
- Digital Signature Certificate (DSC): Required for online filing of documents with the MCA.
- Name Approval: Choose a unique name that complies with Section 8 company name guidelines and get it approved by the MCA.
- MoA and AoA: Prepare the Memorandum of Association (MoA) outlining the company’s objectives and the Articles of Association (AoA) defining internal rules and regulations.
- Incorporation: Upon submitting the application and documents, the MCA will process it and issue a Certificate of Incorporation, formally registering the Section 8 Company.
Additional Points:
- The registration process can be completed online on the MCA portal.
- Consider professional services to assist with the registration process for a smoother experience.
- Registration time typically takes around 7-10 working days.
- There are associated government fees and professional fees (if applicable).
FAQs
A Section 8 company, also known as a Section 8 Company under the Companies Act,
2013, is a type of legal entity registered in India specifically for non-profit purposes.
In India, a minimum of two people are required to form a Section 8 company. There is no restriction on the maximum number of members a Section 8 company can have.
It is suitable for:
- Social welfare organizations
- Educational institutions
- Charitable trusts
- Environmental NGOs
- Research and development organizations
Yes, Section 8 companies in India enjoy certain tax benefits that can make them an attractive option for organizations working towards social welfare. Exemption from Income Tax on profits used for Charitable Activities and Donations made to a registered Section 8 company can be tax-deductible for the donor under Section 80G of the Income Tax Act.
Mandatory Registration, Board Meetings, Annual General Meeting (AGM, Filings with MCA, Maintaining Books of Accounts, Income Tax Return.
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