Section 8 company registration in India

Procedure for section 8 company registration in India

Step 1: Run approval

Reserve unique name (run) is a form that is filed to reserve a name for a new company or to change its existing name. This is the first step in incorporating a section 8 company.

A section 8 company will usually have words like foundation, federation, society, council, club, charities, institute, academy, organization, federation, chamber of commerce, development, association, etc.

The name which you got Approved will be valid for twenty days.

Step 2: Rd1 license:

It is very important step for process of incorporation.

Name approval will be valid when applying for Rd 1 license.

Rd 1 license is a license granted under section 8 to companies as they work on a specific purpose, which is for the upliftment of arts, science, commerce, environment, etc., and utilize the profits they earn. All important documents like moa, aoa, financial statements and other declarations are recorded at this stage.

The approved license will be valid for 30 days.

Step 3: spice form:

Both name and license will be valid at the time of filling the spice form.

This section 8 is the final stage of company incorporation where registered office related documents like rental agreements and utility bills are filed along with Rd-1 license and name approval certificate.

Section 8 complaints

A section 8 company must follow annual compliances like other companies.

In case of non-compliance, the company will be treated as a dormant company and may be struck off from the register.

A section 8 company is also required to be CSR compliant and CSR must be done.

What are the benefits of taking a section 8 company registration in India?

Benefits of “section 8 company” registration

The phrase non-profit in NPO does not mean that the company cannot generate profits or income. It only means that the company may earn income but the promoters cannot benefit from that profit. , all income and profits need to be applied to promote the object. Income cannot be distributed among the promoters.

Nevertheless, there are certain benefits provided to an NGO/NPO under section 8 of the companies act 2013. Several tax exemptions have also been provided. Even donors who donate to a section 8 company are eligible to claim tax exemption against.

Here are some benefits describe

Separate legal identity

A section 8 company is a distinct legal entity and is separate from its members. It has its own legal status separate from its members. And it has eternal existence. Also organized operations and greater flexibility

No minimum capital required

There is no minimum capital requirement to be registered as a section 8 company in India. And the capital structure can be changed at any stage as per the growth requirements of the company. It can be formed even without share capital. Later, the funds needed to carry the business forward can be brought in from members and the general public in the form of donations and/or subscriptions.

No stamp duty

Section 8 company is exempted from payment of stamp duty on moa and AOA as is the case with a private or public limited company. Therefore, no stamp duty is imposed on the incorporation of a section 8 company, which is applicable for registration of other forms of company structures.

Caro

The provisions under company auditor report order or caro are not applicable to this type of company.

Tax benefits

There are many tax benefits for section 8 companies in India.

Name

A section 8 company is not required to prefix its legal name with the suffix “limited or private limited”. It can be registered with names that contain words like association, society, council, institute, academy, foundation, club, charities, organization and federation.

Reliable

A section 8 company has more credibility than all other forms of a charitable organization. Because it comes under the strict rules of the companies act and requires mandatory audit annually. Government regulations on the management of company profits and losses make the company trustworthy. Like moa and atx3 cannot be changed at any level or position.

What kinds of documents required for section 8 company registration in India?

Documents requires for section 8 company registration:

For directors/shareholders

• Pan card of the owner
• Passport size photographs of directors
• Copy of aadhar card/voter id card of directors
• Copy of rent agreement (if rented property)
• Electricity/water bill (commercial place)

For registered office

• Ownership proof (house tax etc.) Or rent agreement
• Utility bill (gas bill, electricity bill)
• Noc (from owners – if the premises are on rent)

Section 8 minimum requirements for company registration

• Minimum 2 shareholders
• Minimum of 2 directors (shareholder and director both can be the same person)
• At least one director must be an Indian resident
• No minimum capital requirement
• Pan issued by the income tax department is a mandatory requirement for Indian citizens.
• Passport is a mandatory requirement for identity proof in case of foreign nationals
• Any one additional identity proof – voter id card/aadhar card/driving license/passport is required.
• Any residential proof i.e. Any utility bill – electricity bill/bank statement/telephone bill/mobile bill

Proof of registered office address:

• In case of rented property, a rent agreement along with latest rent receipt, a copy of the latest utility bill in the name of the landlord, and no objection certificate from the owner document of the premises. It is an essential requirement.
• If the premises is owned by the director or promoter then any proving the establishment of the owners such as sale deed/house tax receipt and no objection certificate.

Section 8 factors to be considered in company name selection

Section 8 the company name must comply with the following:

• Short and simple name
• A meaningful and unique name
• This should not violate any law
• It should not use the term "british India"

Compliances

If a Section 8 company fails to comply with the legal provisions, the Central Government can cancel the license issued under this Act.

In case of cancellation, the company may be injured. Or it may be asked to change its name to add “Private or Public Limited”. And the assets remaining after clearing the debts and liabilities of such company shall be transferred to another section 8 company having similar objects.

However, if the company is found to be operating in a fraudulent manner or in violation of the objects of the company or prejudicial to public interest, the license may be cancelled.

If a company makes default in complying with the provisions of the Act, it may, without prejudice to any other action under the provisions of this section, be punishable with fine which shall not be less than Rs. 10 lakh and may increase up to Rs. 1 crore. The directors and all other officers of the company, who is found in default, shall be punishable with imprisonment for a term which may extend to 3 years, or with fine not less than Rs. 25,000 and may increase up to Rs. 25 lakhs, or both. Provided that it is proved that the operations were carried out fraudulently. Then by default each officer will be responsible for the action.

No such order shall be passed unless the company has been given a reasonable opportunity of being heard.