In India, non-governmental organizations are known as non-governmental organizations registered with the prime objective of promoting arts, commerce, charity, religion, science, education, protecting the environment, and overall social welfare. It intends to apply for its benefits solely to the activities and objectives of the organization.
NGOs in India can be registered in three ways at the discretion of the promoter:
The trust is registered under the Indian Trust Act
Societies registered under the Societies Registration Act
Section 8 Company registered under the Companies Act 2013
In this blog, we will understand in detail about the section-8 company registration process and other topics.
The Section-8 company is incorporated as a non-profit organization (NPO), whose main objective is to promote economic development and enhance social welfare. The Section-8 company can use its income to promote charitable goods, and unlike limited or private companies, its member is not allowed to pay dividends.
Let us now understand the section-8 company registration process.
Section-8 Company Registration Process Required
An entity may choose to apply for registration of a Section 8 company, which must be proved to the satisfaction of the Central Government with the following items:
Registered with items to promote commerce, arts, science, culture, education, sports, charity, protection of the environment, social development, women empowerment, and similar items
Section-8 company registration after incorporation will use its profit only for its activity and any other items
Such companies will not pay dividends to their members
Since the Section-8 company is one of the types of non-governmental organizations, the Section-8 company registration process is similar to the inclusion of other non-governmental organizations.
The section-8 company can be registered as private limited or public limited
The name of the company should include the words Foundation, Association, Forum, Federation, Chamber, Council, etc.
Section 8 Benefits of the company registration process
The government provides various tax reliefs, benefits, and rebates to promoters to promote NGOs. Several other benefits of Section 8 company registration are:
The legal status of Section 8 Company is different from its members.
The section-8 company registration process does not require payment of stamp duty on its MOA and AOA which would otherwise be paid in other types of structure
There is no minimum capital under the Act Companies Act 2013, thus, Section-8 company can be registered without any share capital.
These companies can also obtain the necessary funds later for business operations.
No suffix Limited or Private Limited with name in Section 8 is required; however, it will contain words like association, forum, council, foundation, etc.
Section 8 companies do not require CARO (Company Auditor's Report Order)
These companies are provided with several tax rebates along with parties donating to these NGOs.
A registered partnership firm is allowed to subscribe to Section 8 companies
Section 8 Company Criteria
The following criteria have been laid down under the Companies Act which must be fulfilled for the Section 8 Company registration process:
It should be included under the Companies Act 2013 and apply for a license for MCA
It should have a minimum of two or three directors if registered privately or publicly.
There shall be at least one Director who must be resident of India and must have been in the last financial year for at least 182 days
Initial capital whatever should be invested in the company within two months
Section-8 may follow the bye-laws of the Society. However, unlike other companies, after winding up, its funds and assets are not transferred to its members, instead, they are transferred to another Section-8 company for similar items.
Section-8 companies shall follow the rules and regulations for annual compliance.
All directors should have DIN, DSC, and all valid government documents provided by the government.
Section-8 Company Registration Process
In short, the procedure for obtaining Section 8 registration certificate is as follows:
Apply for name reservation through MCA web service "RUN", or it can also be applied directly through Spice Form (e-form for online application)
Prepare MOA and AOA for rules, regulations, and bye-laws to define and regulate internal management. MOA must be in Form-13, and there is no format for AOA
MOA and AOA will be signed by the customers and mention their name, address, business, and details.
Once the file INC-12 approves the CRC name and allocates the name approval letter. Must be attached to the following form:
MOA in Form-INC 13
AOA
The announcement by practicing professionally as INC-14
Declaration by the applicant in Form INC-15
Name Approval Letter
From 7 June 2019, the separate filing requirement for INC-12 to apply for a license has been removed. Hence it has been concluded that the Section-8 company registration process is now simplified like the others.
Submit the e-form through SPICE and attach the required information as previously enclosed in the INC-12 form. The SPICe form is filed as a link form with two other forms such as SPICe MOA & SPICe AOA.
The CRC will approve the application and issue a license as soon as all actions and requirements are met.
The Conclusion Unlike other companies, Section 8 is stricter for the company; It states that if Section 8 companies fail to comply with the provisions of the companies, the Central Government revokes its license. To comply with his company and to protect himself from the severe punishment of the government. Corpseed
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