Section 8 Company
INCORPORATION OF SECTION-8 COMPANY UNDER COMPANIES ACT 2013
What is Section-8 Company?
Section 8 is a company that is licensed under section 8 of Companies Act, 2013,formerly known as the section 25 company under Companies Act, 1956 with its main object :-
- To promote social welfare, religion, charity, protection of environment, research, education, sports, commerce, art, science or any such other object; and
- Intends to apply its profit, if any, or other income in promoting its object; and
- Intends to prohibit the payment of any dividend to its member,
Where it is proved to the satisfaction of central government may, by issuing license in such manner as may be prescribed, allow that person and associate of person to be registered as limited company under this section without addition to its name of the word ‘limited’ or ‘private limited’.
The minimum requirement that are necessary for such company
- There must be two shareholders;
- There must be minimum two directors (Director and shareholder can be the same person).
- At least one of the director shall be the resident of India.
- No requirement of minimum capital
- The Income-tax PAN is a mandatory requirement in case of the Indian nationals
- Any one of the Identity Proof be it Voter ID/Aadhaar Card/Driving License/Passport is required; Passport is, however, a mandatory requirement for the proof of identity in case of the foreign nationals
- Any one of the Proofs of Residence (Electricity Bill/Telephone Bill/Mobile Bill/Bank Statement)
- The Registered Office address proof (that is the rent agreement along with latest rent receipt and a copy of the latest utility bill in the name of the landlord and a no objection certificate from the owner of the premises, in case the premises are rented)
- In case the premises are owned by either the Director or the Promoters, any of the documents establishing the ownership such as Sale Deed/House Tax receipt etc along with the no objection certificate.
The Procedure for Section 8 Company Registration
- To collect the identity proof (copy of the Permanent Account Number) of all the Directors/Promoters.
- Address Proof: A Copy of a valid Passport/Driving Licence/Aadhaar/Telephone Bill/Electricity Bill which is not older than 2 months.
- A Latest passport size photographs of all the Directors/Promoters
- A Rent Agreement or a Leave & Licence Agreement, if the registered office premise is taken on rent.
- The Utility Bills of the proposed registered office.
- The Consent to act as a Director in Form DIR-2.
- The Directors Directorship details in other Companies/LLPs, if any.
- The second step is to apply for the DSC which is required for filling the forms electronically to the Ministry of Corporate affairs which can be obtained from certified agencies.
- In case Director/promoter not having DIN, Obtain the DIN from the Ministry of Corporate Affairs by filing form spice+.
- The most important step is to apply for the name of the company which is a crucial step in company registration but now can apply through form spice+.
- The next step is to draft the Memorandum of Association and Articles of Association of the proposed company in Form INC 13.
- The next step is to obtain the license under section 8 of new companies with a charitable objective. The person who is desirous to incorporate a company under section 8 is required to file an application in form Spice+ (Simplified Proforma for Incorporating Company Electronically Plus: INC-32) **along with the prescribed fees to register for a license.
- Next step is to prepare INC 14 (Declaration by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in practice)
- Declaration by each of the person making the application in INC 15.
- An estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure.
- Certificate of incorporation – If after the filing of the requisite forms for the incorporation with the registrar of the companies along with the prescribed fees, ROC gets satisfied with the contents of the documents that are filed. Thus after that, the company will issue Certificate of Incorporation in Form INC 16
- It generally takes around 30-45 working days to register a Section 8 company. This duration can, however, be lesser in case the Regional Director approves the application earlier.
**Read notification CG-DL-E-22022020-216319, February 18, 2020
Some essential points of section 8 company
- Partnership firm may be the member of company registered under section 8.
- A company registered under this section shall amalgamate only with another company registered under this section and having similar objects
- It is exempt from stamp duty registration.
If on winding up or dissolution of company, any asset remains after satisfaction of all its liability and debts, may be transferred to the company registered under this section and having same object or may be sold subject to such condition as tribunal impose.