Introduction

Starting a business that aims to contribute to social welfare can be incredibly fulfilling and impactful. In India, one of the most effective ways to establish such an organization is by registering a Section 8 company registration. This type of company, regulated under the Companies Act, 2013, is intended to promote arts, commerce, education, charity, protection of the environment, science, sports, research, social welfare, and religion. In this blog, we will delve into the essentials of Section 8 company registration, including its benefits, eligibility criteria, and the step-by-step registration process.

What is a Section 8 Company Registration?

A Section 8 company registration is a legal entity in India that operates with the primary objective of promoting non-profit activities. Unlike other companies, the profits generated by a Section 8 company registration cannot be distributed as dividends to its members but must be reinvested in furthering its objectives. This type of company enjoys several privileges and exemptions under the Companies Act, 2013, and is often chosen by NGOs, non-profit organizations, and other entities involved in social work.

Benefits of Section 8 Company Registration

1. Tax Exemptions

Section 8 companies can avail of several tax benefits, including exemptions under the Income Tax Act. These exemptions can significantly reduce the financial burden on the organization, allowing more resources to be allocated towards its social objectives.

2. Credibility and Recognition

Being registered under the Section 8 Companies Act 2013 adds a layer of credibility to the organization. This can enhance its reputation among donors, stakeholders, and the general public, facilitating better funding opportunities and partnerships.

3. Separate Legal Entity

A Section 8 company is a separate legal entity, which means it can own property, incur debts, and enter into contracts in its name. This separation of legal identity provides protection to its members from personal liability.

4. Perpetual Succession

The existence of a Section 8 company registration is not affected by changes in its membership. This ensures continuity and stability, allowing the company to operate uninterrupted despite any changes in its leadership or membership.

Eligibility Criteria for Section 8 Company Registration

To register a Section 8 company registration, the following eligibility criteria must be met:

• Objectives: The company must be established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or other similar objectives.
• Profit Utilization: Profits and other incomes must be applied solely towards the promotion of its objectives. No dividend can be paid to its members.
• Founders: The company must have at least two directors (in the case of a private company) or three directors (in the case of a public company).
• Name: The name of the company should not include the words “Private Limited” or “Limited”. Instead, it should reflect its nature of operations and objectives.

Step-by-Step Process for Section 8 Company Registration

1. Obtain Digital Signature Certificate (DSC)

The first step section 8 company registration involves obtaining a Digital Signature Certificate (DSC) for the proposed directors of the company. The DSC is essential for filing electronic documents with the Ministry of Corporate Affairs (MCA).

2. Obtain Director Identification Number (DIN)

Next, the proposed directors must apply for a Director Identification Number (DIN) if they do not already have one. This can be done by filing Form DIR-3 with the MCA.

3. Name Approval

The proposed name of the company must be approved by the Registrar of Companies (RoC). This is done by filing Form INC-1 with the MCA, along with a list of proposed names in order of preference.

4. Draft Memorandum and Articles of Association

The Memorandum of Association (MoA) and Articles of Association (AoA) must be drafted, outlining the company’s objectives, rules, and regulations. These documents are crucial as they define the scope and functioning of the company.

5. Apply for License under Section 8

An application must be filed with the RoC for obtaining a license under Section 8 company registration of the Companies Act, 2013. This involves submitting Form INC-12 along with the required documents, including the MoA, AoA, and a declaration by a Chartered Accountant.

6. Incorporation

Once the license is obtained, the final step is to file the incorporation forms (Form INC-7, Form DIR-12, and Form INC-22) with the RoC. Upon approval, the RoC will issue a Certificate of Incorporation, officially recognizing the company as a Section 8 company.

Know More:- Understanding Section 8 Company Benefits in India

Know More:-Difference between NGO & Section 8 Company

Conclusion

Section 8 company registration online can be a rewarding experience, offering numerous benefits for organizations dedicated to social welfare. By understanding the registration process and meeting the necessary criteria, you can establish a credible and legally recognized entity that contributes positively to society. Whether you are an individual or a group with a vision for social change, a Section 8 company can provide the perfect platform to achieve your goals and make a lasting impact.