Overview

A section 8 company, also known as a not-for-profit company, is a company registered under Section 8 of the Companies Act, 2013. Such companies are formed with the primary objective of promoting charitable or non-profit objectives such as education, religion, art, science, sports, research, social welfare, and the like. Unlike other companies, a Section 8 company cannot distribute dividends to its members. Instead, any income or profit generated by the company must be used for the promotion of its objectives. To register a Section 8 company, certain requirements must be met, such as having a minimum of two shareholders and directors. The company's Memorandum of Association and Articles of Association must also contain specific clauses related to the company's non-profit objectives and its restrictions on the distribution of profits. Section 8 companies are eligible for various tax exemptions and benefits under the Income Tax Act, and they are subject to regulatory oversight by the Ministry of Corporate Affairs.

Eligibility Criteria

The following are the legal requisites for incorporating a Section 8 company in India:

• Minimum two directors: A Section 8 company should have a minimum of two directors. The directors must be at least 18 years old and must have a Director Identification Number (DIN) and a Digital Signature Certificate (DSC).
• Minimum two shareholders: A Section 8 company should have a minimum of two shareholders. These shareholders can be individuals or corporate entities.
• Memorandum of Association (MOA) and Articles of Association (AOA): The MOA and AOA of a Section 8 company must be prepared and filed with the Registrar of Companies (ROC). The MOA defines the company's objectives, while the AOA outlines the company's rules and regulations.
• Registered office: The company should have a registered office in India, which should be declared at the time of incorporation.
• No profit distribution: The main objective of a Section 8 company is to promote charitable causes, and it cannot distribute profits to its members.
• Name of the company: The proposed name of the company should not be similar or identical to any existing company or trademark.
• Obtaining necessary approvals: A Section 8 company must obtain necessary approvals from the concerned authorities, including approval from the Income Tax Department for tax exemption.
• Digital Signature Certificate (DSC): All the directors and shareholders must have a valid Digital Signature Certificate for signing the incorporation documents.
• Director Identification Number (DIN): All directors of the company must have a valid Director Identification Number.
• Payment of fees: The prescribed fees must be paid to the ROC at the time of incorporation.

What are the key benefits of a Section 8 Company?

Some of the key benefits of opening a Section 8 company in India are:

• Tax benefits: Section 8 companies are eligible for tax exemptions under the Income Tax Act, 1961. They are exempted from paying income tax on any profits made for charitable purposes, donations received from donors, and property used for charitable purposes.
• Limited liability: Section 8 companies have limited liability, which means that the personal assets of the shareholders are not liable to pay off any debts or liabilities incurred by the company.
• Brand value: A Section 8 company is recognized as a not-for-profit organization, which enhances the brand value and credibility of the organization in the eyes of donors, investors, and stakeholders.
• Legal status: Section 8 companies have a legal status and are treated as separate entity from its members, which enables them to enter into contracts, hold assets, and sue or be sued in their name.
• Easy funding: Section 8 companies can raise funds from donors, investors, and the government for their charitable objectives. They can also receive foreign contributions with prior approval from the government.
• Perpetual succession: Section 8 companies have perpetual succession, which means that the company's existence is not affected by the death or exit of its members, and it can continue to exist and carry on its objectives.
• Social impact: Section 8 companies have a significant social impact as they are established to promote non-profit objectives such as education, health, environment, and other social welfare activities.

Registration Process

The process of registering a Section 8 company in India is as follows:

Required Documents

The following documents are required to register a Section 8 company in India:

• : PAN cards and Aadhaar cards of all the directors, Passport-size photograph of all the directors, Address proof of all the directors(driving license, passport, voter ID, or Aadhaar card), Email ID and mobile number of all the directors.
• : Address proof of the registered office (electricity bill, water bill, or property tax receipt), No Objection Certificate (NOC) from the owner of the premises Rent agreement (if the premises are rented).
• : Memorandum of Association (MOA) and Articles of Association (AOA) in the prescribed format.
• : Declaration by the proposed directors and subscribers stating that they are not disqualified under Section 164 of the Companies Act, 2013.
• : Consent to act as directors of the company by all proposed directors.
• : A declaration from a practicing Chartered Accountant or Company Secretary stating that all the requirements of the Companies Act, 2013, have been complied with.
• : Statement of assets and liabilities of the company.
• : The proposed name of the company.

What are the annual compliances of a Section 8 Company?

A Section 8 company in India is required to comply with various annual compliances to maintain its legal and financial status. The following are the annual compliances required for a Section 8 company in India:

• Annual General Meeting (AGM): A Section 8 company must hold an AGM every year, and the interval between two AGMs must not be more than 15 months.
• Financial statements: The company must prepare financial statements, including balance sheet, profit and loss statement, and cash flow statement, and file them with the Registrar of Companies (ROC).
• Annual Return: The company must file an Annual Return with the ROC, which contains details about the company's operations and financials.
• Income Tax Return: A Section 8 company is required to file its Income Tax Return with the Income Tax Department.
• Tax Audit: A Section 8 company is required to undergo a tax audit if its annual turnover exceeds a certain limit.
• Statutory Audit: The company must get its books of accounts audited by a Chartered Accountant every year.
• Compliance Certificate: The company must obtain a Compliance Certificate from a Company Secretary in Practice, which certifies that the company has complied with all the necessary legal and regulatory requirements.
• Board Meetings: The Board of Directors must meet at least four times in a year to discuss the company's operations and financials.

Why Approach LAWYASA?

• Expert guidance: Lawyasa provides expert guidance and assistance throughout the registration process, ensuring that all legal requirements are met.
• Online platform: Lawyasa is an online platform, which means that you can access our services from anywhere, anytime.
• Experienced professionals: Lawyasa has a team of experienced professionals who are well-versed in legal requirements and can provide expert advice and guidance.
• Quick turnaround time: Lawyasa strives to provide quick and efficient services, ensuring that your registration is completed in a timely manner.

How can LAWYASA assist?

Lawyasa is a legal service provider that offers comprehensive services for Section 8 company registration in India. Here's how we can help:

• Consultation: Our legal experts can provide a consultation to understand your business requirements and guide you through the entire registration process.
• Name Approval: We can assist you in selecting an appropriate name for your Section 8 company and get it approved by the Registrar of Companies (ROC).
• Drafting of MOA and AOA: Our team of professionals can draft the Memorandum of Association (MOA) and Articles of Association (AOA) as per the legal requirements.
• Filing of Documents: We can help you in filing all the necessary documents with the Registrar of Companies (ROC) and obtain the Certificate of Incorporation (COI).
• Registration under Section 12AA: We can guide you through the process of obtaining registration under Section 12AA of the Income Tax Act, which is essential to avail of tax benefits.
• Annual Compliances: Our legal experts can assist you in maintaining the necessary records, filing annual returns, and complying with all legal requirements.

Frequently Asked Questions