A section8 Company is a company whose main objective are to Promote fields such as arts, science, commerce, sports, education, religion, charity or such other objectives, uses its profit for the promotion of its objectives and they doesn’t pay any dividend to its members in the company. In simple words, it is a Company with no intention to make a profit. Any individual or association of the persons can form a Section 8 Company. Minimum of 2 persons are required to set up a Section 8 company.
There are certain steps that are needed to be followed to set up a section8 company. All the group of people who are willing to set up a section8 company is required to fulfill these steps and then only they can become a section8 company.
The steps are as follows:
- The first step is that one has to take a Digital Signature certificate for all the Directors of the company that is needed to be set up.
- The second step is the director identification number to be obtained for all the Directors.
- The third step is the name approval to be obtained from Registrar of Companies (ROC).
- The fourth step is that an application is to be made to ROC for obtaining a License from a ROC.
- . The fifth step and final step is that after obtaining a License from ROC, Forms to be filed for obtaining an Incorporation certificate.
There are simple procedures that everyone involved in the formation of section 8 of a company need to follow are:-
1) Minimum of two people is required for the registration of the section 8 company.
2) Obtaining the digital signature certificate (DSC) for proposed directors not having directors identification number (DIN).
3) Obtaining directors identification number from the ministry of corporate affairs by filling the form.
4) Filling of the form inc-1 for the reservation of the name we want.
5) Post approval of name from the concerned registrar of the companies.
There are a lot of advantages of setting up a section 8 companies and if one is doing so then they will get those advantages and they can make full use of it.
Some of the advantages are as follows:
1) Tax benefit
2) Share capital
3) No need to use title
4) Transfer of ownership
A section 8 company enjoys the exemptions and a variety of benefits from the companies act and the other laws. It is better to incorporate a company form of non-profit organization as it is governed by the central law unlike the many corporate societies and the different-different trusts.