Section -8 Non-Profit Organisation
- Limited Liability Protection
to Director's personal assets
- For social welfare activities
- Tax Benefits and Rebates
- Best option for opening NGO
- Less Procedural Compliances
- Minimum Two Directors
- Minimum Two Shareholders
- No Minimum Capital required
- Maximum Fifteen Directors
- One Director shall be
The Section 8 Company means a Company formed with an object to promote commerce, art, science, sports, research, education, religion, protection of the environment, charity or any other object, who intends to apply their income and profits in promoting their objects and prohibits the payment of dividend to its members.
In India, Section-8 Company is regulated by the Indian Companies Act, 2013 (and the amendments thereof) and the rules & regulations that are made thereunder and is administered by the Ministry of Corporate Affairs, Government of India through the Offices of Registrar of Companies (‘RoC’).
Section 8 Companies are similar to a Trust or Society as the Societies and Trusts are registered under the State Government regulations whereas Section 8 Company is registered under the Central Government’s “Ministry of Corporate Affairs (MCA)”.
This, however, has various advantages when it is compared to Trust or Society and it also has higher credibility amongst the donors, Government departments, and other stakeholders. There is no requirement to use the word “Limited” or “Private Limited” as the case may be.
Benefits of Section-8 Company
Requirements for the Incorporation of Section 8 Company
Companies Act, 2013 has listed the following requirements for the incorporation of a Section 8 company
1. Document Required
Minimum 2 Directors
Minimum Number of Members: Two/Seven (Two if it is proposed to be incorporated as Private Limited and Seven in case of Public Company)
Minimum Number of Directors: Two/Three (Two if it is proposed to be incorporated as Private Limited and Three in case of Public Company)
Self-attested PAN Card of Members and Directors.
Identity Proof of Directors
Self-attested ID proof of Members and Directors- (Anyone out of the following -Valid Passport/Voter ID/Aadhar Card/Valid Driving License)
Address Proof of Directors
Self-attested Address Proof of Members and Directors and Should Not be Older than 2 Months (Anyone out of the following – Bank Statement/Electricity Bill/Telephone Bill/Mobile Bill)
Passport Size Photo
2-2 Passport Size Colored Photos of Members and Directors.
Business Address Proof
NOC from the Owner of Property/Property Papers (Title Deed)/Utility Bill (Either Electricity Bill or Mobile Bill or Telephone Bill) (Should Not be Older than 2 Months)
2. Requirement of Information:
Authorized and Paid-up Share Capital of the Proposed Company and Number of Shares Subscribed by Members.
Explanation: A Company can be started with the minimum capital of Rs. 500000/- and 10 members and shall be treated as a Public company.
Process of Registration
The Ministry of Corporate Affairs vides its notification dated 18th February 2020 effective from 23rd February 2020 has further amended the Companies (Incorporation) Rules, 2014 thereby substituting the old Form INC-32 (SPICe) with web service SPICe+ along with certain other amendments.
Application for Reservation
The first step is to make an application for reservation of name which shall be reserved by using the web services (SPICe+) available at www.mca.gov.in along with the specified fees. Before Applying for a name, kindly check that the name is available on MCA as well as no trademark. Is there no such name under the Class of work you are going to apply.
The new integrated form consists of two parts i.e. PART A and Part B. The Name(s) of a company can be reserved in Part A of SPICe+. In case the applicant wants to apply for name, incorporation and other integrated services together, he can do so together by filling necessary information in Part A and Part B.
Fill the Part B of SPICe+
The second step is to fill the Part B of SPICe+ for registering the Company. The said form contains various sections which allow you to save and modify information if required. while filling the said sections following attachments are required to be attached:-
- Memorandum of Association in Form INC-13
- Articles of Association
- Declaration in INC-14 by any CS/CA/CMA in practice stating that the draft memorandum and articles of association have been drawn up in conformity with the provisions of Section 8 of the Act and Rules made thereunder
- Estimation of the future annual income and expenditure of the company for the next 3 years, specifying the sources of the income and the objects of the expenditure
- Grounds on which the application is made
- Brief description of the proposed activity
- Statement of assets and liabilities
- Declaration by each of the persons making the application in Form INC-15 i.e. a declaration that draft memorandum and articles of association have been drawn up in conformity with the provisions of Section 8 of the Act and Rules made thereunder
- List of promoters (name, address, DIN or Income Tax PAN)
- List of proposed directors (name, address, DIN or Income Tax PAN
- Application for Licence
- Consent to act as Director in DIR-2
Convert SPICe+ Form into PDF
The third step is to convert the SPICe+ form into a pdf format to affix the DSC.
The fourth step is to fill the AGILE-PRO, where certain changes have been introduced which are as follows:-
- Mandatory registration of EPFO and ESIC.
- Mandatory opening of Bank accounts.
- Facility to obtain the GSTIN using the said form.
Upload Forms on MCA
After affixing the DSC on the said forms are required to be uploaded on the Ministry of Corporate Affairs in accordance with the existing process.
Declare Company’s Subscribers & First Directors
Declaration of all Subscribers and first Directors of the company which is currently being filed in Form INC-9 will be automatically generated in pdf format and shall be submitted only through Electronic form.
After the registration, the section-8 company can easily promote the respective fields such as commerce, art, sports or environment safety or whatever it is working for. Besides, the company registered under Section-8 need not pay any dividend to its members and the company still gets all the benefits of limited companies.
Feel free to contact us for more information about Section 8 company registration
Content: The CBIC Provisional credit (i.e.10%) reduced to 5% under Rule 36(4) w.e.f. 1 January 2021
Interest not payable if GST return filed belatedly but amount deposited in Cash Ledger within due
FAQs on Section-8 Company
Any person or Group of associated persons who are intending to register a limited liability company for the objects specified below can apply for the Company Registration or Formation under Section 8 of the Companies Act, 2013 . The following points have to be proved to the satisfaction of the Central Government that:
- Promotion of commerce, art, science, sports, education, research, and social issues like social welfare, religion, charity, protection of the environment or any other object is also included.
- The company after incorporation intends to apply its profits, if any, or other income in promoting such objects only;
- Payment of Dividend to the members should be prohibited by the company.
Yes. in accordance with rule 8(7) of the Companies (Incorporation) Rules, 2014, for the Companies registered under Section 8 of the Act, the name of such Companies shall include the words foundation, Forum, Association, Federation and the like etc.
No, as per the Rules only a limited company registered the this Act or under any previous company law shall make an application to the Registrar for issue of license. Therefore, a company with unlimited liabilities cannot be registered as a Section 8 Company.
Stamp duty on memorandum & articles of association of a FAQs on Section 8 Companies 7 Company or on any increase in share capital is governed by Indian Stamp Act, 1899 as adopted by respective state or stamp act of respective state, as the case may be. Some of the states provide privileged rates for stamp duty on MOA/ AOA of Section 8 Companies or on increase in authorized share capital. Summary of rate of stamp duty in various states is placed at Annexure – E.
No, Rule 3(6) of the Companies (Incorporation) Rules, 2014 prohibits one person company to invest in securities of any body corporate.
Yes, under the Companies Act, 2013, a Partnership firm or an LLP can become the member of Section 8 Company. The provisions of respective Acts need to be complied with by the partnership firm or LLP as the case may be.
Yes. Section 8(1) of the Companies Act, 2013 allows person or association of persons to be registered as a Section 8 Company on fulfillment of certain conditions and procedure as prescribed therein. The term “person” has not been defined in the Companies Act, 2013. Section 2(41) of the General Clauses Act, 1897 provides that “person” shall include any Company, or association or body of individuals, whether incorporated or not. Accordingly, a Society registered under the Societies Registration Act, 1860 is a person. Therefore, Society can be registered/converted as a Section 8 Company.
Section 8 companies require a grant of a license by the Central Government. All such licenses are revocable as well on the following grounds:
- the company contravenes provisions of Section 8;
- terms of the license are violated;
- when its conduct is fraudulent, or it violates its own objectives and public policy.
The Government can even order the company to be wound-up or amalgamated with another similar company under certain circumstances. The Government has to hear the company before passing such orders.