How to Register a Section 8 Company in India: NGO Registration

Register a Section 8 Company in India: Best Price Guarantee

Starting a nonprofit organization in India is a noble endeavor, and registering it as a Section 8 Company can offer numerous benefits. Section 8 Companies are established to promote charitable activities, education, and social welfare without the intent of making a profit. This extensive guide explores everything you need to know about Section 8 Company Registration, including its advantages, eligibility criteria, and the registration process. We’ll also highlight how MyCAfiling can assist you with a cost-effective and efficient registration process.

Important Points Regarding Section 8 Company in India

A Section 8 Company is governed by Section 8 of the Companies Act, 2013. Here are some key points to understand:

1. Non-Profit Objective: Section 8 Companies are formed to promote education, commerce, charity, sports, research, social welfare, or other similar objectives.
2. No Profit Distribution: Any income the company generates cannot be distributed to its members but must be used towards its objectives.
3. Legal Status: Section 8 Companies have a legal entity, which means they can own property, enter into contracts, and sue or be sued in their name.
4. Regulatory Compliance: They must adhere to specific compliance requirements and file annual returns and financial statements with the Registrar of Companies (ROC).

Advantages of Section 8 Company Registration in India

1. Tax Benefits: Section 8 Companies are eligible for tax exemptions under the Income Tax Act, including exemptions on donations received.
2. Limited Liability: The liability of members is limited to the extent of their contribution to the company’s capital.
3. Credibility: Registration under Section 8 enhances the credibility of the organization, making it more attractive to donors and funding agencies.
4. Legal Entity: The company is a separate legal entity, protecting its members from personal liability.
5. Government Grants: Eligibility for government grants and subsidies that are specifically available for nonprofit organizations.

Eligibility Criteria for Section 8 Company Registration in India

To qualify for Section 8 Company Registration, the organization must meet the following criteria:

1. Non-Profit Objective: The primary objective must be to promote charitable, educational, or social welfare activities.
2. Incorporation Requirements: The company must be incorporated as a private limited company or a public limited company.
3. No Profit Distribution: The company must ensure that its income is utilized towards its objectives and not distributed among its members.
4. Minimum Members: A Section 8 Company requires at least two directors and two members. In the case of a public company, a minimum of seven members is required.

Requirements for Section 8 Company Registration

1. Name of the Company: The name must include words like “Foundation,” “Association,” “Society,” or “Charity” to reflect its non-profit nature.
2. Registered Office: A registered office address in India is necessary for correspondence and compliance purposes.
3. Directors and Members: Details of the directors and members, including their identity and address proofs.
4. Compliance with Regulations: The company must comply with the Companies Act, 2013, and other relevant regulations.

Documents Required for Section 8 Company Registration

The following documents are required for Section 8 Company Registration:

Procedure for Section 8 Company Registration

The process for registering a Section 8 Company involves several steps:

1. Obtain Digital Signature Certificate (DSC): Directors must obtain a DSC for signing documents electronically.
2. Obtain Director Identification Number (DIN): Apply for DIN for all directors of the company.
3. Name Approval: Apply for the reservation of the company name through the RUN (Reserve Unique Name) service on the MCA portal.
4. Draft MOA and AOA: Prepare the Memorandum of Association and Articles of Association in line with the non-profit objectives.
5. File Form INC-12: Submit Form INC-12 along with required documents to the Registrar of Companies for approval of Section 8 status.
6. Incorporation Form Filing: File Form SPICe+ for incorporation with the ROC, along with the prescribed fees.
7. Obtain PAN and TAN: Apply for PAN and TAN for the company.
8. Certificate of Incorporation: Once approved, the ROC will issue a Certificate of Incorporation along with the Section 8 status.

What are the Annual Compliances for Section 8 Companies in India?

Section 8 Companies must adhere to various annual compliance requirements:

Penalties for Non-Compliance

Non-compliance with Section 8 Company regulations can result in:

1. Fines and Penalties: Monetary penalties for late or non-filing of documents and returns.
2. Suspension of Benefits: Loss of tax exemptions and other benefits.
3. Legal Actions: Legal proceedings initiated by the Registrar of Companies for persistent non-compliance.
4. Revocation of Registration: Cancellation of Section 8 status and deregistration of the company.

Why MyCAfiling?

Choosing MyCAfiling for your Section 8 Company Registration provides numerous benefits:

1. Expert Guidance: Access to a team of professionals with extensive experience in Section 8 Company registrations.
2. Affordable Services: Competitive pricing for registration services, ensuring cost-effective solutions.
3. Streamlined Process: Efficient handling of the registration process, from documentation to compliance.
4. Comprehensive Support: Ongoing support for compliance and regulatory requirements post-registration.
5. Trusted Platform: A reliable platform with a track record of successful registrations and satisfied clients.

FAQs

1. What is a Section 8 Company?
   A Section 8 Company is a nonprofit organization established under Section 8 of the Companies Act, 2013, with objectives related to charity, education, or social welfare.
2. What are the advantages of Section 8 Company Registration?
   Advantages include tax benefits, limited liability, enhanced credibility, and eligibility for government grants.
3. What are the eligibility criteria for Section 8 Company Registration?
   The company must have a non-profit objective, be incorporated as a private or public company, and ensure that income is used for its objectives.
4. What are the documents required for Section 8 Company Registration?
   Required documents include identity and address proof, MOA and AOA, incorporation certificate, bank statement, and financial proof.
5. What is the procedure for Section 8 Company Registration?
   The procedure includes obtaining DSC and DIN, name approval, drafting MOA and AOA, filing Form INC-12, and submitting Form SPICe+.
6. What are the annual compliances for Section 8 Companies?
   Annual compliances include filing annual returns, and financial statements, conducting AGMs, and submitting income tax returns.
7. What are the penalties for non-compliance?
   Penalties can include fines, suspension of benefits, legal actions, and revocation of registration.
8. Can a Section 8 Company distribute profits to its members?
   No, a Section 8 Company cannot distribute profits to its members. All income must be used towards its charitable objectives.
9. Is a Section 8 Company eligible for tax exemptions?
   Yes, Section 8 Companies are eligible for tax exemptions under the Income Tax Act.
10. How many directors are required for a Section 8 Company?
    A minimum of two directors is required for a private Section 8 Company and seven for a public Section 8 Company.
11. Can a Section 8 Company convert to a profit-making company?
    No, Section 8 Companies cannot convert to profit-making entities. They must comply with their non-profit objectives.
12. What is the role of the Memorandum of Association (MOA)?
    The MOA outlines the company’s objectives and scope of activities.
13. What is the role of the Articles of Association (AOA)?
    The AOA defines the internal rules and regulations governing the company.
14. Can a Section 8 Company receive foreign donations?
    Yes, Section 8 Companies can receive foreign donations, subject to compliance with the Foreign Contribution (Regulation) Act, 2010.
15. How long does it take to register a Section 8 Company?
    The registration process typically takes 15-20 working days, depending on the completeness of the application and documents.

In conclusion, Section 8 Company Registration provides a robust framework for establishing a non-profit organization with significant advantages and support. By choosing MyCAfiling, you can benefit from expert guidance, cost-effective services, and a streamlined registration process. Register your Section 8 Company with MyCAfiling today and start making a positive impact with your nonprofit organization.