Section 8 Company under Companies Act, 2013

INTRODUCTION

A section 8 company is one of the forms of Not for Profit Organisation (NPO) under the Companies Act, 2013. Previously, an NPO was registered under section 25 of the Companies Act, 1956.
 
The aim behind incorporation of an NPO is promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any other such object. An NPO intends to apply its profits, if any, or other income to promote its objects and prohibit the payment of any dividend to its members.
 
A section 8 company is registered under the Central Government of the Ministry of Corporate Affairs.
 
DEFINITION
 
According to section 8(1) of the Companies Act, 2013, where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this act as a limited company—
 
(a) 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;
 
(b) Intends to apply its profits, if any, or other income in promoting its objects; and
 
(c) Intends to prohibit the payment of any dividend to its members,
 
the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word "Limited", or as the case may be, the words "Private Limited", and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.
 

WHY INCORPORATE A SECTION 8 COMPANY?

  • A section 8 company is incorporated for promotion of objects of commerce, art, science etc.
  • It is registered as a limited company and enjoys all its privileges, and be subject to all the obligations of limited companies.
  • A firm may be a member of the company registered under this section.
  • It is issued a license by the Central Government.
  • It is exempted from some provisions of the Income Tax Act, 1961.
  • It is prohibited from the payment of any dividend to its members.
     

PROCESS OF INCORPORATION OF A SECTION 8 COMPANY

  1. Obtain Digital Signature Certificate (DSC) for the proposed director(s): First of all, the basic requirement to incorporate a company is having a DSC as all the filings to the Registrar of Companies are made through an online application system which is appended with a valid DSC.
  2. Obtain Director Identification Number (DIN) for the proposed director(s): DIN is a unique Identification number allotted by the Central Government to any person intending to be a director of a company.
  3. Select suitable company name and make an application to the MCA for availability of name: The name of a section 8 company without the addition of the words “Private Limited or Limited” and the company name shall comply with the Company Name Availability Guidelines under the Companies Act, 2013.
  4. License requirement: The proposed company shall apply to the Central Government for license in a prescribed form, as may be prescribed under Companies (Incorporation) Rules, 2014, before incorporation of company.
  5. Capital requirement: There is no minimum capital (authorised or paid up capital) requirement for registering a public company.
  6. Registered office: It is the principal place of business of the proposed company from where it can control its operations.
  7. Documentation & Filing: Documents, such as Memorandum of Association (MOA) and Articles of Association (AOA), need to be drafted, signed and filed electronically, along with the fees applicable.
  8. Certification of Incorporation: After scrutiny, the Central Registration Centre (CRC) issues a Certificate of Incorporation.
     

TIME REQUIRED

Generally, it takes 25-30 days from the date of application to get the Certificate of Incorporation from CRC.

ADDITIONAL REQUIREMENTS

Following additional documents are required:

  • A copy of declaration, by each person making the application, in the prescribed format as per the Company (Incorporation) Rules, 2014.
  • All copies of the documents must be self-attested by the document holder.
  • Telephone bill/ mobile bill/ electricity bill/ bank account statement must be in the name of the applicant and should not be older than 2 months.
  • In case of documents that are in languages other than English, it should be transferred to English with the help of a professional translator, carrying his details (name, signature, address, and seal).