Firstly we understand that NGO (Non-Governmental Organization) is a generic term used for non-profit organizations that operate independently from any government. It includes various types of organizations such as trusts, societies, and non-profit companies. Other side, a Section 8 company is a specific type of non-profit organization (NPO) that is registered under the Companies Act, 2013.
»Section 8 company registration is governed by the Companies Act, 2013 in India. The primary objective of a Section 8 company is to promote arts, commerce, science, education, research, social welfare, religion, charity, or any other useful purpose, provided that the profits, if any, or other income is applied for promoting only the objectives of the company.
»Section 8 company registration is one of the ways in which an NGO can be registered under the Companies Act 2013. This registration process provides a legal framework for the NGO to operate as a non-profit organization, and the primary objective of a Section 8 company is to promote art, science, commerce, technology, sports, education, social research, social welfare, religion, charity, and protection of the environment, among others.
»Section 8 company can work anywhere in India after successful completion of the registration process. although, it is important to note that a Section 8 company cannot distribute its profits among its members and must use all its income and profits for the promotion of its objectives.
»Section 8 company registration is a viable option for NGOs that wish to operate as a non-profit organization under the Companies Act 2013 and promote various social, charitable, or other objectives.
»Section 8 companies are incorporated under the Companies Act, 2013, and are managed by a board of directors, as specified in their Memorandum of Association(MoA) and Articles of Association (AoA). Unlike trusts, which are managed by trustees as per the terms of the trust deed, section 8 companies have a separate legal entity and are run by a board of directors who are appointed as per the provisions of the Companies Act. The MoA and AoA of a section 8 company outline its objectives, powers, and rules of management, and the directors are required to adhere to these documents while managing the affairs of the company.
»Section 8 companies can be incorporated either as a company limited by shares or as a company limited by guarantee with or without share capital. In the case of a company limited by guarantee, the members of the company give a guarantee to contribute a certain amount towards the assets of the company in the event of its winding up. In a company limited by shares, the liability of the shareholders is limited to the amount unpaid on their shares.
1. Taxation benefits: Section 8 companies are exempted from paying income tax on their profits, subject to certain conditions.
2. No stamp duty: Section 8 companies are exempted from paying stamp duty on the e-Memorandum of Association (MoA) and e-Articles of Association (AoA).
3. Credibility: Section 8 companies are considered more credible than other non-profit organizations because they are registered under the Companies Act, which is a prestigious and well-established law in India.
4. Limited liability: Members of Section 8 companies have limited liability, which means that they are not personally liable for the company debts and obligations.
5. Perpetual succession: Section 8 companies have perpetual succession, which means that they continue to exist even if the members or directors change.
6. Easy fundraising: Section 8 companies can raise funds easily through donations, grants, and other means, as they have a legal framework that ensures proper utilization of funds.
It may vary depending on the state and the specific circumstances of the company.
1. Identity proof: PAN Card and Aadhaar Card of all Directors and Shareholders.
2. Present Address proof: Latest bank statement, telephone bill or electricity bill
3. Permanent Address proof: Voter ID or Passport or Driving license or Aadhar
4. Passport size photograph: Passport size photograph of all the directors and shareholders.
5. Registered office address proof: Copy of the rental agreement, in case the property is on rent for the registered office.
6. NOC from the landlord: A No Objection Certificate (NOC) from the landlord for using the premises as the registered office of the company.
7. Main Object of Section 8 which describe the objectives, rules, and regulations of the company.
8. Declaration and affidavit: A declaration and affidavit from all the directors and shareholders stating that they are not disqualified to act as directors or shareholders of the company.
9. Digital signature certificate (DSC): DSC of all the directors is required for filing the application for Section 8 company registration.
Any Other Licence required to operate Section 8 Company In India
Some common licenses and permits that may be required for a Section 8 company registration-
1. Income tax exemption: A Section 8 company can apply for tax exemption under Section 12A and 80G of the Income Tax Act, 1961, by submitting the required documents.
2. GST registration: If the annual turnover of the Section 8 company exceeds the threshold limit of Rs. 20 lakh (or Rs. 10 lakh in special category states), it needs to register for GST.
3. FCRA registration: If the Section 8 company receives foreign contributions, it needs to register under the Foreign Contribution (Regulation) Act, 2010.
4. Shop and Establishment Act: A Section 8 company needs to obtain a Shop and Establishment Act registration, which is mandatory for all businesses that employ people.
5. Fire safety certificate: If the Section 8 company operates from a commercial building, it needs to obtain a fire safety certificate from the local fire department.
6. Any other licenses or permits: Depending on the nature of the activities of the Section 8 company, it may require additional licenses or permits, such as pollution control board clearance, food safety license, etc.
Therefore, a Section 8 company is not only required to obtain a license with registration, but it may also require certain other licenses or permits depending on the nature of its activities.
To register a Section-8 company under the Companies Act, 2013, the following forms need to be filed with the CRC along with Licence of Section-8 Company.
»WEb form SPICe+ (INC-32): SPICe+ (Simplified Proforma for Incorporating Company Electronically) is a single form that combines various services related to company incorporation, such as name reservation, allotment of DIN (Director Identification Number), and incorporation application. This form is used for the incorporation of all types of companies, including Section 8 companies.
»Web form (INC-13) e-MOA (e-Memorandum of Association) and (INC-31) e-AOA (e-Articles of Association): The e-MoA and e-AoA of the company need to be filed along with the SPICe+ form. These documents describe the objectives, rules, and regulations of the company.
»INC-35 (AGILE-PRO)- Application for Goods and services tax Identification number ,employees state Insurance corporation registration
»Web form INC-9: Declaration by Subscribers and First Directors Pursuant to Sections 7(1)(c) to the Companies Act, 2013 and rule 15 of the Companies (Incorporation) Rules, 2014
»Attachment a Declaration by Directors (DIR-2): This form contains a declaration by all the directors of the company that they meet the eligibility criteria and do not have any disqualifications to act as directors.
»(INC-22) situation of registered office: If not filed with Incorporation Notice of situation of registered office and verification INC-22 form contains the details of the registered office of the company, along with the proof of address, such as a copy of the rental agreement or the property tax receipt along with Utility bill should not be older than two months.
The first step to register a Section 8 company in India is to obtain name approval from the Ministry of Corporate Affairs (MCA). The process usually takes 1-2 days, but it can take longer if there are any objections or issues with the proposed name.
It is important to note that Section 8 companies can use certain words at the end of their names, such as foundation, association, or institution, to indicate their purpose. However, the use of these words is not mandatory.
Further, the proposed name must not be identical or similar to an existing company name, and it must include a word that denotes the activity undertaken by the company. This is to ensure that there is no confusion among the public regarding the nature and purpose of the company.
Important steps in the process of Section 8 company registration in India can be broadly explained –
1. Preparation of DSC: The first step is to prepare the digital signature certificate (DSC) for the proposed directors and shareholders of the Section 8 company.
2. Name Approval: Once the DSC is prepared, the next step is to file an application for name approval of the proposed Section 8 company on the MCA portal. The name should contain words that reflect the nature of the organization's activities, such as foundation, society, association, council, club, charities, academy, organization, federation, institute, chamber of commerce, development, etc.
3. Filing of Incorporation Forms: After getting the name approval, the next step is to file the incorporation forms (INC-32, INC-31, Agile-Pro-S, and INC-13) along with the requisite documents before the CRC for Section 8 company registration. These forms include details of the company, its directors, shareholders and registered office address.
4. e-MoA and e- AoA Submission: Along with the incorporation forms, the Memorandum of Association (MoA) and Articles of Association (AoA) of the Section 8 company should also be filed. These documents define the purpose, objectives, and rules and regulations of the company.
5. PAN, TAN and Bank Account: Once the Section 8 company is registered, company also received along with COI, Permanent Account Number (PAN) , Tax Deduction and Collection Account Number (TAN), Current Account, ESI-PF, GST if any and Professional Tax if applicable for the company.
It is important to note that the process of Section 8 company registration may take some time and require compliance with various legal and regulatory requirements. It is highly recommended to approach the right Consultant Compliance Calendar LLP for Section-8 company registration service provider who ensure all the steps are completed properly and in a timely manner and give Registration certification hassle-free.
Ministry of Corporate Affairs (MCA) has granted certain exemptions to Section 8 companies
in India through a notification dated 05.06.2015. These exemptions are aimed at making it
easier and more cost-effective for small companies to register as Section 8 companies and
to carry out their activities.
1. Exemption from the requirement of minimum paid-up capital: Under the Companies Act, 2013, a company needs to have a minimum paid-up capital to get registered. However, Section 8 companies are exempted from this requirement.
2. Exemption from the requirement of a common seal: Section 8 companies are exempted from the requirement of having a common seal, which is usually used to authenticate company documents.
3. Exemption from the requirement of holding a physical meeting of the Board of Directors: Section 8 companies can hold board meetings through video conferencing or other electronic modes without the need for physical presence.
4. Exemption from the requirement of appointing independent directors: Section 8 companies are exempted from the requirement of appointing independent directors, which is mandatory for other types of companies.
5. Exemption from certain provisions of the Companies Act, 2013: Section 8 companies are exempted from certain provisions of the Companies Act, 2013 related to related party transactions, the appointment of directors, and the holding of annual general meetings.
6. Notice Timing- Section 101(1) of the Companies Act, 2013 mandates that a general meeting of a company shall be called by giving not less than 21 days; notice in writing
to every member of the company who is entitled to vote at the meeting. However, companies licensed under Section 8 of the Act are exempted from this provision and may give notice for calling a general meeting just before 14 days instead of 21 days. Section 8 companies are companies that are formed with the primary objective of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or any other useful object, and intend to apply their profits, if any, or other income towards promoting such objectives. Such companies are not formed for the purpose of making a profit.
7. Minutes of the Meetings- Section 118 of the Companies Act, 2013 deals with the maintenance of minutes of meetings of the board of directors and other committees of the company. It mandates that every company shall maintain minutes of all meetings in a books kept for that purpose, and such minutes shall be recorded in accordance with the provisions of the Act.
Although, an exception has been made for section 8 companies in this regard. As per Section 118(10) of the Companies Act, 2013, the provisions of Section 118 shall not apply to Section 8 companies, except that the minutes of the meeting shall be recorded within 30 days from the conclusion of the meeting.
This means that Section 8 companies are not required to maintain the minutes of meetings in a book as required under Section 118(1), but they still have to record the minutes of the meeting within 30 days from the conclusion of the meeting. This provision ensures that section 8 companies maintain a record of their meetings while reducing the compliance burden on them.
8. Financial Statement- Section 136(1) of the Companies Act, 2013 mandates that every company shall send a copy of its financial statements, including consolidated financial statements (CFS), if any, auditors report, and every other document required by law to be annexed or attached to the financial statements to its members, trustees of debenture holders, and all other persons entitled to receive such documents not less than 21 days before the date of the annual general meeting.
However, as per Section 136(1) proviso of the Companies Act, 2013, companies registered with charitable objects, including section 8 companies, are allowed a relaxation of seven days in the time period for sending copies of financial statements to their members, trustees of debenture holders, and other persons entitled to receive such documents. Therefore, such companies are required to send the copies of financial statements and other documents not less than 14 days before the date of the annual general meeting.
This provision provides a relaxation of seven days in the time period for sending copies of financial statements to members, trustees of debenture holders, and other persons entitled to receive such documents for companies registered with charitable objects, including section 8 companies. This ensures that such companies are able to comply with their obligations under the Companies Act, 2013 while reducing the compliance burden on them.
9. Increase No. Of Directorship: section 8 companies, which are companies registered with charitable objects, are exempted from these requirements. As per the Companies (Incorporation) Rules, 2014, a section 8 company can have any number of directors, and there is no need to pass a special resolution in a general meeting for the appointment of more than 15 directors.
10. Quorum requirement for board meetings: Section 8 companies is different from that of other companies. As per the Companies (Incorporation) Rules, 2014, the quorum for a meeting of the board of directors of a section 8 company shall be either 8 members or 25% of its total strength, whichever is less. However, the quorum for such a board meeting shall not be less than two members.
This means that if a Section 8 company has a total strength of less than 32 members, the quorum for its board meeting would be 2 members. However, if the total strength of the company is 32 or more, the quorum would be 25% of its total strength, subject to a minimum of 8 members, but not less than two members.
It is important to note that the quorum requirement for board meetings of section 8 companies is different from the general quorum requirement for board meetings of other companies as specified in sub-section (1) of Section 174 of the Companies Act, 2013. As per this provision, the quorum for a board meeting of a company shall be one-third of its total strength or two directors, whichever is higher. However, as mentioned earlier, the quorum for board meetings of section 8 companies is governed by the Companies (Incorporation) Rules, 2014, and not by Section 174 of the Companies Act, 2013.
All Above cited exemption including other which are not mentioned specifically has been provided to Section 8 companies to facilitate their operations and ensure that they can fulfill their charitable objectives without being burdened by compliance requirements.
Conclusion-These exemptions have made it easier and more cost-effective for small companies to register as Section 8 companies and carry out their activities. However, it is
important to note that these exemptions are subject to certain conditions and requirements, and companies need to comply with them to avail of the exemptions.
MOA stands for Memorandum of Association, and AOA stands for Articles of Association. These are legal documents that need to be filed with the Registrar of Companies (RoC) as apart of the registration process of any company. MOA contains the basic details of the company such as its name, registered office, object clauses, capital, liability, and shareholding pattern. AOA contains the rules and regulations for the internal management of the company, such as the appointment and powers of the directors, the conduct of meetings, and voting procedures.
INC-13 is a form that needs to be filed along with the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form for the registration of a company. This form is called the Memorandum of Association (MOA). It contains the details of the MOA of the company and is used for the digital filing of these documents with the CRC. INC-31 is a form that can be used for the registration of a company under Section 8 of the Companies Act, 2013. This form is called the AOA for a company.
In summary, MOA and AOA are legal documents that need to be filed for the registration of any company, while INC-13 is a form that needs to be filed for the digital filing of these documents with the CRC. INC-13 & INC-31 is a form that can be used specifically for the registration of a Section 8 company.
The AGILE-PRO form contains the following details:
»GSTIN details: The company can apply for GST registration using this form by providing the details of its business activities and turnover. It is important to note that the AGILE-PRO form is applicable only for companies that opt for GST registration at the time of incorporation. If the company does not opt for GST registration at the time of incorporation, it can apply for it separately at a later stage.
»ESIC registration: The company can apply for ESIC registration, which is mandatory for companies that employ more than 10 employees.
»EPFO registration: The company can apply for EPFO registration, which is mandatory for companies that employ more than 20 employees.
»Profession Tax Registration, opening of bank account, and
»Shops and Establishment Registration at the time of incorporation is known as AGILE-PRO.
AGILE-PRO (INC-35) is a part of the SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) form, which is used for the incorporation of all types of companies, including Section 8 companies, under the Companies Act, 2013.
The AGILE-PRO form needs to be filed along with the SPICe+ form for the registration of a company. It streamlines the registration process by allowing the company to apply for various registrations at the time of incorporation itself. This saves time and effort for the company and ensures that all registrations are obtained within a short period of time.
It is important to note that the AGILE-PRO form is mandatory but option to choose some registration is optional subject to applicability , and the company can choose to apply for the registrations separately at a later stage if it so desires.
However, if the company opts for the AGILE-PRO-S form, it must ensure that all the necessary details are provided accurately and completely, and all required documents are uploaded as per the guidelines.
section 8 company can be registered as a startup provided it meets the eligibility criteria of the Startup India scheme. The Startup India scheme is an initiative of the Government of India to promote and support startups in the country. As per the definition provided by the Department for Promotion of Industry and Internal Trade (DPIIT), a startup is an entity that is less than 10 years old and has an annual turnover of less than INR 100 crore.
Section 8 companies, which are companies registered with charitable objects, can also be eligible for registration as startups if they meet these criteria. However, it is important to note
that the registration process for startups is separate from the process of incorporating a section 8 company. To register as a startup, the company must apply for recognition with the DPIIT and provide the required documentation and information. Once recognized as a startup, the company can avail various benefits and incentives provided by the government to support its growth and development.
Section-8 Company considered as an other than small company definition under the companies Act 2013 and are required to comply with various annual compliances, which are similar to those of other types of companies registered under the Companies Act, 2013.
Some of the key annual compliances for Section 8 companies are:
1. Conducting a minimum of two board meetings in a year.
2. Maintaining proper books of accounts as per the provisions of the Companies Act, 2013.
3. Preparing financial statements, including a balance sheet, profit and loss account, and cash flow statement.
4. Conducting a mandatory audit of the company's financial statements by a chartered accountant.
5. Filing the company's income tax return with the Income Tax Department.
6. Filing financial statements in Form AOC-4 with the Registrar of Companies (RoC).
7. Filing an annual return with the RoC in Form MGT-7.
8. Fulfilling any additional compliances required for obtaining registration as a Section 8 company, such as registration under Section 12AA of the Income Tax Act, 1961, or approval under Section 80G of the Income Tax Act, 1961.
It is important for Section 8 companies to comply with these annual compliances to maintain
their legal status and to avoid any penalties or legal consequences for non-compliance. How Compliance Calendar LLP helps you to get NGO- as a Section 8 company registration in India-
To register an NGO as a Section 8 company in India, you may consider Compliance Calendar LLP, team of professionals or expert such as a lawyer or a chartered accountant, who can guide you through the process and ensure that you fulfill all the legal requirements-
1. Preparation of documents: A professional can assist you in preparing all the necessary documents, such as the Memorandum of Association, Articles of Association, and other legal documents required for registration.
2. Understanding the legal requirements: A professional can help you understand the legal requirements for registration, such as the minimum number of members required, the rules and regulations for the company, and other legal obligations.
3. Filing the application: A professional can help you in filing the application for registration with the Registrar of Companies and ensuring that all the necessary details and documents are included.
4. Follow-up: A professional can follow up with the MCA (CRC) on your behalf and ensure that the registration process is completed in a timely manner.