How to register section 8 company?
Section 8 company is the basically an organization that is registered as the non-profit organization in India. Some of the major objectives of the section 8 company includes promotion of arts, commerce, charity, education, protection of the environment, science, social welfare, sports, research and religion. According to the objectives of the section 8 company and the rules applicable to it this company shall invest its profits, or any other income received only in promoting its objectives. The features of section 8 company is completely similar with the limited company along with one distinction that section 8 Company cannot use the words “Section 8” or “Limited” in its name.
Benefits of section 8 company
- Tax Benefits– Number of tax exemptions are provided to the section 8 company and to the persons who are contributing in section 8 companies.
- Separate legal identity– The legal identity of section 8 company is separate from its members thus the liability of members is limited to their share.
- Stamp Duty Exemption– Section 8 company is exempted from paying the stamp duty on registration.
- No minimum capital requirement– There is no minimum capital requirement for the formation of section 8 company like private limited company.
- Easy process of incorporation-There is no requirement of minimum paid-up capital for forming Section 8 Company.
In order to register a section 8 company it is required to fulfill the following requirements-
- At least two shareholders
- Minimum two directors(Shareholders and directors can be the same)
- At least one director shall be the Indian resident
- PAN card number.
- Identity proof
- Proof of residence(Electricity/telephone/mobile bill or bank statement)
- Passport size photograph
- In case of rented office premise No Objection Certificate (NOC) from the owner.
- Copy of rent agreement in case of rented premises.
Process of registering section 8 Company
Step-1 -Collection of the documents
Initially, the applicant is required to collect the above-mentioned documents along with director’s consent in DIR-2.
Step-2-Applying for Digital signature certificate
Once all the documents are collected there is a requirement of applying for the Digital Signature Certificate. It is mandatory to obtain DSC for every director of the company as all the documents submitted online are required to be authorized by putting digital signature certificate.
Step-3- Obtaining Director’s Identification Number
It is mandatory for every director to obtain the valid Director’s Identification Number from the Ministry of Corporate Affairs by filing Form DIR-3, in case the director does not have DIN.
Step-4 Applying for Company name
Now the applicant has the valid DSC its time for him to choose the valid name of the company. While choosing the name of the company the applicant should keep in mind the various guidelines issued by the ministry for the appropriate name.
Step-5-Drafting MOA and AOA
As soon as the approval is received the Memorandum of Association and Article of Association shall be drafted. Further, it shall be sent to ROC along with other documents in e-Form INC 13 for the issuance of the license under section 8 of the Companies Act, 2013. The subscription pages of both MOA and AOA shall be signed by each subscriber of the memorandum.
Memorandum of Association-MOA is the legal document that contains the details of the company like company name physical address of registered office, names of shareholders and the distribution of shares etc. This document basically defines the relationship of the company with its shareholders.
Article of Association- AOA is also called the charter of the company that defines the basic functioning of the company. Every information regarding the company like power distribution among directors, officers, shareholders etc, right of veto and primary function of the company is stated in it.
Step-6 Application for license under section 8
Now in order to obtain the license the applicant is required to file an application in form INC 12 along with the prescribed fees to register of companies. Along with INC-12 following documents shall also be submitted-
- INC-13 Memorandum of Association. Article of Association
- INC-15 Declaration by each Subscriber to MOA (On Non- judicial stamp paper of Rs. 100/- and duly notarized).
- Estimated Statement of Income & Expenditure for Next three years and it should be signed the proposed Promoters.
- List of proposed Promoters and Directors of the Company.
- Subscribers page (AOA & MOA) should be hand written by the Subscriber (s), and witness.
Step-7 Certificate of Incorporation
The applicant shall file the incorporation documents in the FORM INC 7(containing the declaration of compliance with the requirements of the Act on application for registration of a company), INC 22(regarding notice of situation of registered office) and DIR 12(for appointment of directors of the company) along with the prescribed fees. In case registrar of the company is satisfied with the contents of the documents that are filed a certificate of registration will be granted in form INC-16.