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Companies Act, 2013 introduced section 8 Company which is similar to Section 25 company of the Companies Act, 1956. The general purpose of starting a section 8 company is to do social or welfare activities where the profits of the company can not be distributed as the dividend to its members. Section 8 Company registration procedure is different from the incorporation of a private limited company or an LLP. A separate license of section 8 company is required to be obtained before incorporation by applying to the central government of India. To get the license for section 8 company a statement of the objects of the company and projected statement of income, expenditure, assets and liabilities for three years is required to be submitted to the regional director of the ministry of corporate affairs. The detailed conditions, documents required and the procedure of incorporation of section 8 company is as under.
"DSC is the equivalent of physical or paper certificates in digital format. As the application for section 8 company registration is filed online with Digital Signatures of the director, hence the process starts with the issuance of the digital signature for all the directors/promoters. For issuance of a DSC, the Photo, ID and Address proof is to be submitted along with signed forms."
"It is a permanent number issued by the registrar of companies, as a unique identification number to the director of a company or designated partner of the LLP. As per new companies Act, 2013 no person can hold an office of the director unless he is issued a DIN. For allotment of DIN, an application to ROC is made with Photo, Attested ID and Address proof duly attested by CA, CS or CMA."
"Name of each company must be unique, new and should not be same or similar to an already registered company, LLP or a Trademark. After the DSC and DIN allotment, an application is made to the ROC for approval of name; the registrar is vested with discretionary powers concerning approval of name. Our advisors shall be a help to you while deciding the name of the company."
"An application is moved before the regional director of the ministry of corporate affairs; the application must be accompanied by a statement of the object of the proposed section 8 company and a projection of three years profits and loss, its p rojected statement of assets and liabilities. The regional directors are vested with discretionary powers to approve an application for licesnse."
"The Name, object, state in which company is registered, the maximum amount of capital which it can raise (Authorised Capital), & a declaration that the company is a limited company are written in a document known as Memorandum of Association (MOA). The Internal rules are framed as articles of association. The promoters need to adopt and sign MOA & AOA, which is then filed with the ROC."
"After completing all the required documents necessary for formation of section8 company , necessary forms are filled for incorporation of section 8 company"
"A Company needs a bank account to operate its business, our specialists shall be helping you in opening the bank acccount after the PAN is allotted, TAN is for TDS payment and Compliance"
1 MINIMUM TWO PERSON
Two person is needed to become the shareholder / director of the company. However, the number of shareholders can't exceed 200
2 NO MINIMUM CAPITAL
No minimum capital is prescribed, it must be based on the business requirements. The registration fee is based on the amount of capital
3 ONE RESIDENT DIRECTOR
One director of the company must be resident in India. A person is said, resident, when he stays in India for at least 182 days in the FY
4 UNIQUE NAME
Name of the company should be unique, and it must not be same or similar to the name of any existing company or a trademark.
5 NO PROFIT DISTRIBUTION
Profits of section 8 company to be applied only for the promotion of object of the company for which it is formed and there is a prohibition on payment of dividend to its members.
6 NAMING GUIDELINE
Name shall not include Pvt Ltd or ltd at the end, and it shall end with words like Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust
7 SOCIAL OR WELFARE OBJECT
The object of the section 8 Company shall be to promote Commerce, Art, Science, Sports, Education, Research, Social Welfare, Religion, Charity & Protection of Environment
8 TAX BENEFIT
Section 8 Company is eligible for income tax benefits once it is registered with the income tax department. We are experienced in representing and obtaining the certification of income tax
A section 8 Company is subject to tax @ 25%, however, if registered under section 12 of the income tax act, 1961 entire income of the company is tax-free. The persons donating money to such organisations also get the tax benefit,subject to certain condition.
There is no need to prescribe or subscribe to a minimum paid up capital for section 8 company. As it is for social or welfare cause, section 8 company can be funded by donations, subscriptions from the public at large or its members.
A section 8 company is a separate legal entity and after its incorporation acquires a distinct legal identity separate from its members. Its existence is perpetual which can be interfered only by law.
As an incorporated entity a section 8 company is more credible than any other form of charitable organisation. It is subject to stringent reporting under companies Act which also requires its mandatory audit every year.
A section 8 company does not have to add private limited or Limited at the end of the name, even if it is incorporated as a company under the companies Act, 2013 and can retain its identity in its name.