Overview

A Section 8 business is distinct in the world of Indian corporate formations because of its distinct goal and operating structure. Section 8 businesses were created by the businesses Act of 2013 and their main goals are to promote the arts, commerce, science, research, education, sports, charity, social welfare, religion, the environment, and any other target. These businesses stand out because their goal is not to make money. The article provides an analysis of a Section 8 business, the paperwork needed for registration, the licenses that are required, the benefits and drawbacks of this type of organization, and the detailed instructions for registering one online—especially with Associate Buddy.

A Section 8 Company: What Is It?

A legal body incorporated under the Companies Act of 2013 whose main purpose is to further charity purposes is known as a Section 8 company. Section 8 firms reinvest any money or profits back into the goals they were founded to promote, in contrast to other businesses that seek to maximise earnings for their shareholders. Members of these firms do not get dividend payments. Because of their philanthropic character, the government accords them special status, which includes various benefits and tax advantages.

Documents Required for Registering a Section 8 Company

Registering a Section 8 company requires meticulous documentation. The essential documents include:

Digital Signature Certificate (DSC) of all the directors.
Director Identification Number (DIN) for all the directors.
Memorandum of Association (MOA) and Articles of Association (AOA) outlining the company’s objectives and regulations.
Proof of Identity for all directors and members (PAN card, passport, etc.).
Proof of Address for all directors and members (Aadhaar card, voter ID, passport, etc.).
Passport-sized photographs of all directors.
Ownership Proof or a Rent Agreement and a No Objection Certificate (NOC) from the landlord if the office is on rented premises.
Income Tax Returns (ITR) of the directors may also be required.

Essential Licenses and Registrations for Section 8 Company

To operate legally and benefit from the privileges offered to Section 8 companies, obtaining the following licenses and registrations is crucial:

Incorporation Certificate from the Registrar of Companies (RoC).
12A Certificate for tax exemption.
80G Certificate to allow donors to claim tax deductions.
Professional Tax Registration as applicable.
Goods and Services Tax (GST) Registration if the company’s turnover exceeds the threshold limit.

Step-by-Step Procedure for Section 8 Company Registration

Obtain Digital Signature Certificate (DSC)
Purpose: Required for signing electronic documents.
Steps:
Apply for DSC from a certified authority.
Submit necessary documents (identity proof, address proof, and passport-sized photographs).
Obtain Director Identification Number (DIN)
Purpose: A unique identification number for directors.
Steps:
Apply for DIN through Form DIR-3 on the MCA portal.
Attach identity proof and address proof along with the application.
Name Approval
Purpose: Secure a unique name for the company.
Steps:
File Form INC-1 for name availability.
Propose up to six names in order of preference.
Ensure the name does not resemble any existing company or LLP and complies with the naming guidelines.
Draft Memorandum of Association (MOA) and Articles of Association (AOA)
Purpose: Outline the company’s objectives and the regulations governing its operations.
Steps:
Draft MOA specifying the charitable objectives.
Draft AOA detailing the rules and regulations for the company’s internal management.
File Form INC-12 (License under Section 8)
Purpose: Apply for a license to operate as a Section 8 company.
Steps:
File Form INC-12 with the following attachments:
Draft MOA and AOA.
Declaration in Form INC-14 (declaration by an advocate, Chartered Accountant, Cost Accountant, or Company Secretary in practice, that the draft MOA and AOA have been drawn up in conformity with the provisions of the Act and rules).
Declaration in Form INC-15 (declaration by each subscriber to the MOA that the company’s objective is to promote charitable activities and they will not be entitled to receive any dividend).
Estimated income and expenditure for the next three years.
File Incorporation Forms
Purpose: Officially incorporate the company.
Steps:
Once the license is obtained, file the following forms with the Registrar of Companies (RoC):
Form INC-7 (Application for Incorporation of Company).
Form INC-22 (Notice of Situation or Change of Situation of Registered Office).
Form DIR-12 (Particulars of Appointment of Directors and the Key Managerial Personnel).
Attach necessary documents (MOA, AOA, declaration by directors, affidavits from subscribers and directors, address proof, identity proof).
Certificate of Incorporation
Purpose: Officially register the company.
Steps:
After verification of the documents, the Registrar of Companies (RoC) issues the Certificate of Incorporation along with a unique Company Identification Number (CIN).
Apply for PAN and TAN
Purpose: Obtain Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
Steps:
Apply online through the NSDL or UTIITSL portal.
Submit the Certificate of Incorporation and other required documents.
Open a Bank Account
Purpose: For financial transactions.
Steps:
Open a bank account in the name of the Section 8 company.
Provide the Certificate of Incorporation, PAN, and other KYC documents.
Obtain Necessary Licenses and Registrations
Purpose: To avail of various benefits and comply with regulations.
Steps:
Apply for 12A and 80G registration with the Income Tax Department for tax exemptions.
Register for GST if the turnover exceeds the threshold limit.
Ensure Compliance
Purpose: To adhere to legal and regulatory requirements.
Steps:
Conduct regular board meetings and maintain minutes.
File annual returns and financial statements with the RoC.
Comply with audit requirements and file income tax returns.

By following these steps meticulously, you can successfully register a Section 8 company in India. For expert guidance and a smoother registration process, consider partnering with professional service providers like Associate Buddy. They can assist with documentation, compliance, and all procedural requirements to ensure a hassle-free experience.

Benefits of Section 8 Company

Tax Exemptions: significant tax advantages under the Income Tax Act’s Sections 12A and 80G.
No Minimum Capital Need: There is no minimum capital need.
Limited Liability: Each member’s liability is capped at the amount of shares they own.
Credibility: Increased credibility as a result of strict regulatory compliance.
Different Legal Entity: In legal terms, the corporation and its members are two different entities.
Perpetual Succession: Membership changes have no impact on the company’s ability to continue operating.

Cons of a Section 8 Company:

Difficult Formation Process: The registration procedure is complex and need central government approval.
Strict Compliance Requirements: Strict rules and high compliance standards.
Fewer Fundraising Options: Issuing equity shares is not a viable option for obtaining money.
Reinvesting Profits: Any profits must be used to further the goals of the firm rather than being given to members.

Registering a Section 8 Company Online through Associate Buddy

Registering a Section 8 company online can be streamlined with the assistance of professional services like Associate Buddy. Here’s how Associate Buddy can help:

Documentation Assistance: Helping in the preparation and filing of necessary documents.
Digital Signature Certificate (DSC) and Director Identification Number (DIN): Assistance in obtaining DSC and DIN for the directors.
Drafting MOA and AOA: Expert drafting of the Memorandum of Association and Articles of Association.
Application Filing: Filing the application with the Registrar of Companies (RoC) and following up until the incorporation certificate is issued.
Tax Exemption Certificates: Assistance in obtaining 12A and 80G certificates for tax exemptions.
Compliance Management: Ongoing compliance management to ensure adherence to all legal requirements.
By leveraging Associate Buddy’s expertise, you can ensure a smooth and hassle-free registration process, enabling your Section 8 company to focus on achieving its philanthropic goals.

Compliances for Section 8 Company

To maintain its status and benefits, a Section 8 company must adhere to several compliances:

Annual Filing: Annual returns and financial statements must be filed with the Registrar of Companies (RoC).
Board Meetings: Regular board meetings and maintaining minutes of meetings.
Statutory Audit: Annual audit of accounts by a certified auditor.
Income Tax Returns: Filing annual income tax returns.
Complying with MCA Regulations: Adhering to the Ministry of Corporate Affairs (MCA) guidelines and regulations.
Event-Based Compliances: Reporting any changes in the company structure, such as changes in directors or the registered office.

In summary

Creating a Section 8 corporation may be a very efficient approach to support social causes and receive certain financial and legal advantages. The benefits frequently exceed the drawbacks, even with the intricate registration procedure and compliance requirements. You may easily manage the complexities of registration and compliance by working with a professional service like Associate Buddy, freeing you up to concentrate on the main goals of your company.

Visit Associate Buddy to get additional in-depth advice and help and to get started on the path to having a significant social effect.

Comprehensive Guide to Section 8 Company Registration

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