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The idea of incorporating a non-profit making company in India is not a new term as it has been in the business community since ages. In Companies Act 2013, it is mentioned in the section 8 and this is why it is popularly known as the Section 8 Company. The primary objective of incorporating such company is to encourage science, sports, art, education, research, social welfare, religion and environment protection etc. where profit doesn’t play any vital role. As far its structure is concerned, it is much alike a trust or society as it is registered under the Central Government’s Ministry of Corporate Affairs. A Section 8 Company enjoys many privileges and exemptions under Company Law. A Non-profit Organization is a Company which

Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

Intends to apply its profits, if any, or other income in promoting its objects; and

Intends to prohibit the payment of any dividend to its members

We make it easy for our clients to incorporate a Section 8 company by providing all necessary legal and professional support in respect to incorporation and business management. Our highly talented legal professionals are experts in lending you full support to help you realize your business dream.

WHY SECTION 8 COMPANY

Easy to Formation

A Section 8 company can be formed by two persons only, by complying with the prescribed formalities of the Companies Act. Many privileges and exemptions under Company Law. Registered partnership firm can be a member in its own capacity.

Separate Legal Entity

This is the most prominent quality of a Section 8 Company. It refers to the statement that company and its members are completely distinctive. The biggest advantage of a section 8 company is that its identity is distinct from that of its members. A company is a separate person having its own rights & Obligations.

Perpetual Succession

Death, insolvency and insanity etc of any of the member does not affect the continuity of the company. Thus the life of the company does not depend upon the life of its members.In case of death of the owner or transfer of shares, your business won’t get affected. There will be no effect on firm’s continuance.

Limited Liability

The greatest benefit of Section 8 Company is limited liability. If any liability arises then its member is not personally affected; members are only liable for unpaid shares held by them and not more than that. Being the biggest advantage with this type of company, it means that the owners are not personally responsible for business debts and obligations of the incorporation.

Greater Flexibility

A Section 8 company is required to perform lesser legal formalities as compared to a public company. It enjoys special exemptions and privileges under the company law.

Tax Benefits

A Section 8 company is not required to publish its accounts or file several documents. Therefore, it is in a better position than a public company to maintain business secrets.

FREQUENTLY ASKED QUESTION

WHAT IS DIGITAL SIGNATURE CERTIFICATE AND WHY IS IT REQUIRED FOR COMPANY INCORPORATION?

Digital Signature Certificate (DSC) as the name suggests it is a digital signature of an individual and it is required for filling the e-forms of company incorporation electronically to Ministry of Corporate Affairs.

WHO CAN BECOME A DIRECTOR OF A SECTION 8 COMPANY?

The Director required to be above 18 years of age and must be a natural person. He may or may not be citizen or residence of India. We can say that even foreign nationals can be Directors in Indian Section 8 Company.

WHAT IS THE MINIMUM LIMIT OF DIRECTORS TO FORM A SECTION 8 COMPANY?

In case of Section 8 Company, minimum no. of director is two.

DO PROMOTERS HAVE TO BE PRESENT PERSONALLY TO INCORPORATE A COMPANY?

Yes, promoters need to be present to personally meet us at our office or meet at any place for the registration of a Company. All the incorporation documents required to be present in original and scanned copy also required to submit.

WHAT IS THE LIMIT OF MEMBERS TO FORM A SECTION 8 COMPANY?

In case of Private Limited Company, minimum no. of members is two and maximum are two hundred.

HOW MUCH MINIMUM CAPITAL REQUIRED TO FORM A SECTION 8 COMPANY?

In case of Section 8 Company, minimum capital required is Rs.1,00,000/-.

WHAT IS MEMORANDUM OF ASSOCIATION & ARTICLE OF ASSOCIATION?

MOA & AOA of the company defines all the rules and regulations and the working flow of company. It also defines everything about the company's objects, capital, identity, goals and working pattern. After the name of the company is select the Memorandum of Association and Articles of Association of the company is required to be drafted, the last page of the MOA and AOA is known as subscriber sheet which need to be filled in by the promoters in their own hand writing including their personal details and shareholding ratio.

WHAT IS THE PROCEDURE OF NON-PROFIT MAKING COMPANY?

STAGE-1: DOCUMENTATION

Firstly provide all the required documents mentioned below.

STAGE-2: DIGITAL SIGNATURE CERTIFICATE (DSC – CLASS – II)

The Second stage is to Apply for DSC. DSC is required for filling the forms of company registration electronically to Ministry of Corporate Affairs. We obtain it from (certifying agencies.).

STAGE-3: DIN (DIRECTOR IDENTIFICATION NUMBER)

The Third stage is to apply for DIN. The Unique Number allotted to the Directors of the company which remains valid for whole life of the director and is required to become director of any company.

STAGE-4: COMPANY NAME AVAILABILITY

The Fourth stage is to apply Name of the company. Most Crucial aspect of company registration is the name approval of the company.

STAGE-5: DRAFTING OF MOA & AOA

The Fifth step is start after the name of the company is Approved the Memorandum of Association and Articles of Association of the company is drafted, the last page of the MOA and AOA is referred as subscriber sheet which need to be filled in by the promoters in their own hand.

STAGE-6: LICENSE UNDER SECTION 8 FOR NEW COMPANIES WITH CHARITABLE OBJECTS

A person or an association of persons desirous of incorporating a company with limited liability under sub-section (1) of section 8 without the addition to its name of the word "Limited", or as the case may be, the words "Private Limited", shall make an application in Form No.INC.12, INC 13, INC 14 & INC 15 along with the prescribed fee, to the Registrar for a license under sub-section (1) of section 8.

STAGE-7: CERTIFICATE OF INCORPORATION

If after filling the Requisite forms for incorporation with the Registrar of Companies along with fees, ROC is satisfied with the contents of the documents filed, ROC will issue the License in form No. INC.16 (Certificate of Incorporation) under section 8(1) read with rule 19 of Companies (Incorporation) Rules, 2014. Such company registered under section 8 shall enjoy all the privileges and be subject to all the obligations of limited companies.

WHAT THE COMPLIANCES ARE AFTER THE INCORPORATION OF SECTION 8 COMPANY?

Apply for PAN and TAN

Apply for Sales Tax / Service Tax Registration based on the nature of Business.

Filing ADT-1 for Appointment of First Auditor of the Company within 1 Month of Incorporation of Company and in case the Board fails to appoint such auditor, it shall inform the members of the company, who shall within ninety days at an Extra Ordinary General Meeting appoint such auditor and such auditor shall hold office till the conclusion of the first Annual General Meeting.

Filing Income Tax Return of Company on or Before 30th September every year

To maintain proper Books of Accounts

Get your account books Audited Every Year.