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Section 8 Company Registration
Popularly known as Section 8 company is a company registered with charitable objects such as the promotion of Arts, commerce, science, education, sports, protection of the environment, religion, charity, etc. By promoting it as a not-for-profit organization, the Act does not bar the company from profit creation but rather prohibits distributing profit among members. This says that all the income or profit from any activity of the company must be utilized towards charitable purpose for which it is registered.
The charitable company is registered under Section 8 of the Companies Act, 2013, which provides it special status due to its objects. Compared to other types of companies, Section 8 company enjoys various exemptions and relaxations.
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Section 8 company registration procedure
Day 1
- Application for Digital Signature Certificate
Day 2 - 4
- Checking Name availability
- Application for Name Reservation under “RUN“
- Reservation of Name
Day 5 - 8
- Drafting of MoA, AoA & other required documents
- Payment of Stamp Duty
- Notarization of required documents
Day 9 - 13
- Application to grant a license in form INC-12
- Government processing time for approval
- License under section 8 in form INC-16
Day 14 - 16
- Filing application for company registration
- Application for DIN Allotment
Application for PAN and TAN of company
Day 17 - 19
- Government processing time
- Certificate of Incorporation
Documents required for formation of Charitable Company
01
Photographs
Latest Passport size photograph of Shareholders and Directors
02
PAN Card
PAN Card of shareholders and Directors. Foreign nationals must provide a valid passport.
03
Identity Proof
Voter ID/ Passport/ Driving License of Shareholders and Directors
04
Proof of Address
Telephone Bill /Electricity Bill/ Latest Bank Account Statement of Shareholders and Directors
05
Business Address Proof
Electricity Bill/ Telephone Bill of the registered office address in India
06
NOC from Owner
No Objection Certificate to be obtained from the owner(s) of the registered office
07
Rent Agreement
Rent Agreement of the registered office should be provided, if any
08
Statement of Income & Expenditure
Estimated Statement of Income & Expenditure for the next three years
Benefits of incorporation of Section 8 company
Limited Liability
A company registered under Section 8 ensures limited liability to its members. The liability of the members is limited only to the extent of the capital subscribed and unpaid. The losses and obligations do not create a charge over the personal properties of members or directors. This helps the promoters to freely run the non-profit organisations.
Separate Legal Identity
Being registered as a company, it obtains a separate identity apart from its members. Therefore, it can own and hold the assets and liabilities in its own name irrespective of the connection with the members. The change in members or the directors neither affects its existence or the assets & liabilities or rights & obligations.
Tax and Compliance Exemptions
With its registration under Section 8 of Companies Act, it obtains a special status – distinct from other entities. Not only the company enjoys tax exemptions, but also the donors can claim an exemption for the donation made (under Income Tax). Apart from tax exemption, the company is also exempted from the applicability of many compliance-related provisions.
No Corporate Title
Although the company enjoys the benefit of the corporate entity, it is not labelled as the corporate entity. The company does not need to add the suffix “Private Limited” or “Limited” after its name. This exemption is provided so that third parties offer their attention to the company’s purpose and not its status assuming it is profit making organisation.