A company licensed under section 8 of the companies act, 2013 for promotion of research, social work, etc. is called a section 8 company.
Section 25 Company (under Companies Act, 1956) is a prior version. Section 8 Companies are a legal form of “Non-Profit Organizations (NPOs) or Non-Governmental organizations (NGOs)”. A Section 8 Company has the authority to work anywhere in the country.
The process and necessities of a Section 8 Company are actually equivalent to a limited company. Including all the rights and commitments that accompany such a limited company. The main viewpoint where they differ is that a Section 8 Company can’t utilize the words “Section 8” or “Limited” in it’s name.
Being an NPO or Non-profit Organization does not imply that the Company can’t make a benefit or
income. It just implies that the Company can earn benefits however the promoters are not to
profit from those benefits. The benefits can’t be disseminated among the promoters. All incomes
must be applied to advancing the objective of the company.
Still, certain exclusions and advantages have been accommodated to an “NGO or an NPO” under section 8 of the Companies Act 2013. The donors contributing towards a Section 8 Company are eligible to confirm the Tax Exemption against these gifts.
“LegalRaasta” offers to assist you in all the matters of company registration. Let our expert team handle the complex procedure of “completing papers, selecting and searching availability of name, logo or trademark designing, trademark registration, etc.” While you can concentrate on matters of business operations requiring your attention. We will stand by you through each and every stage of its incorporation. For any queries on related topics, you can consult our experts’ team.
A Section 8 Company is created by those who do not wish to earn profit from this venture. Rather they want to dedicate themselves to improve some parts of the social structure.
You are required to fill in your details, online, in our simple questionnaire given above. It contains Name, Complete Address, Proposed Names for the Company, Number of Directors with their details, Authorized Capital, etc.
Applications would be filed with the ROC to obtain DIN and DSC for the Directors and should be duly signed. First, We need to apply for DSC. Once it has been received, Form DIR-3 is to be filed with the ROC to get their DIN. A passport-sized photograph attested ID Proof, and Address proof of the Director is to be attached to these applications.
You suggest your preferences and we’ll conduct Company Name Search. After your approval of the 3
options, we’ll apply for a unique name for your Company. Name availability has to be checked in the
“Reserve Unique Name” or RUN facility.
A maximum of 2 names is to be proposed, initially, in Form INC-1. If rejected 1 resubmission is allowed. Both times in separate formats.
We will apply for the Section 8 License with the Central Government. The right format to use is Form
INC-12. It is to be sent with “MoA” in Form INC-13. “AoA” and Declaration of CA/CS/CWA are to be
sent in Form INC-14. Declaration by Directors or Applicant is to be sent in Form INC-15.
COI or Certificate of Incorporation is proof that the company has been created. The unique CIN (Company Identification number) is also mentioned in this.
As soon as all the processes have been completed and your Section 8 Company has been registered, we’ll apply for your PAN and TAN. It is done in Forms “INC-7, 8, 9, 10, 22, DIR-2, and 12” with the ROC, along with the required documents. We’ll get them ready, and will send them to you immediately.
Unlike other Trusts which are governed by the Trustees as per a Trust Deed, the operations of Section 8 Companies are managed by the Board of the Directors as per their “MoA and AoA”.
A “Section 8 Company” must follow the provisions prescribed under the Companies Act, 2013, such as “Maintaining Book of Accounts, Audits, Return Filing, Board Meetings, etc”.
A Section 8 Company shall not make any changes to the provisions of it’s “MoA & AoA” without seeking approval from the Central Government first.
The voting rights of the shareholders of a Section 8 Company are based on the number of shares held by them. Similar to that of any other company.
The Company has to follow the provisions of the Income Tax Act.
If Section 8 Company comes under the purview of the GST Act, it must get registered with GST.
It may not convert itself to any other kind of company structure without complying with conditions, as applicable.
Section 8 Company is not allowed to raise capitals by way of deposits but they can accept donations from the general public. Below are some of the ways by which it can raise funding:
The name of your Section 8 Company is the first impression to the world. It’s selection, therefore, is very important. It should stand out, yet be easy to remember, attractive, relevant, and indicative. Here are some points you can keep in mind when choosing the name of your company.
The name of your “Section 8 Company” shall include the words “Association, Federation, Chambers, Confederation, Council, Electoral trust Foundation, Forum, and other such words.” But there is no need to add the word Limited or Private Limited to its name.
The name of your Section 8 Company should indicate the principal objects of the Company as set out in its “MoA”. For example, “Aware Health and Research Foundation or Nagarjuna Agricultural Research and Development Institute” are Section 8 Companies. And their names indicate the kind of work undertaken by them. This helps in branding and goodwill.
The proposed name should not fall in the range of undesirable names as specified in Rule 8 of Companies (Incorporation) Rules, 2014. The name of your section 8 company should not be abusive, against the customs and beliefs of any religion, and it should not contain words or phrases which are used as a slur and are offensive to a particular group of people.
The name should be brief and not too long. Moreover, it should be easy to pronounce. A person should be able to recall the name.
You are not allowed to name your Company to be exactly the same or identical as of an existing company name or trademark or for which a trademark has been applied. At “LegalRaasta”, you can check if the name which you are proposing matches someone else’s or not.
Every name need not indicate the objects of the company, compulsorily, but when there are some indication of objects in the name, then it shall conform to the objects mentioned.
|SPICE + PART A||Name Approval|
|SPICE + PART B||Incorporation Application,License,PAN and TAN|
|INC-9||An affidavit from each Director and subscriber of the MoA|
|INC-13||Memorandum of Association (MoA)|
|INC-14||Declaration from a practicing Chartered Accountant or Company Secretary|
|INC-15||Declaration by each Subscriber of MOA (On duly notarized Non- judicial stamp paper of Rs. 100/-)|
|INC-22||Notice of Location of the registered office|
|DIR-2||Consent of Directors to act on behalf of the Company|
|DIR-3||Application to ROC to get DIN|
|DIR-12||Appointment of Directors of the Company|
If a Section 8 Company fails to comply with the legal provisions, then the central government may revoke the license issued under the given act.
In case of revocation, the company may get wind-up. Or it may be simply asked to change its name by adding either “Private Limited or Public Limited”.
And the assets remaining after clearing debts and liabilities of such a Company shall be transferred to some other Section 8 Company having similar objects.
If the operations of the Company are found to be conducted fraudulently or in violation of the objects of the Company or unfavorable to public interest then, also, the license can be revoked.
If a company defaults in complying with the provisions of the Act, then it shall, without prejudice to any other action under the provisions of this section, be punishable with a fine which shall not be less than Rs.10 lakhs and may get extend to even Rs.1 crore. The Directors and all other officers of the company, found in default, shall be punishable with imprisonment for a term which may extend to 3-years, or with a fine of not less than Rs.25, 000 that too may extend to Rs. 25 lakhs, or both. Provided that it is proved that the operations were conducted fraudulently.
Then every officer in default shall be liable for action.
Any such order shall not be passed unless the company has been given a reasonable opportunity of being heard.
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