An NGO is a not-for-profit organization or the voluntary citizen’s group working for social c...
A Non-Profit Organization can be registered as a company, trust or society. Section 8 Company registration can be completed as a company under section 8 of the Companies Act, 2013.
Incorporation of section 8 company can be for the Following Purposes-
Section 8 Company has more benefits in comparison to trust and society. This type of company has more credibility among donors, government departments, and other stakeholders.
The list of the following documents is required for incorporation of section 8 company:
A Section 8 Company has to comply with the annual compliances like other companies, and in the case of non-compliance, the company will be treated as a dormant company and it can be struck off from the register.
Here are the steps required to incorporate a Section 8 Company:
First, obtain the Digital Signature Certificate (DSC) of all the directors and promoters of the company, in case they don’t have the same. For obtaining DSC, an application is made to the certifying authority.
Secondly, obtain the Directors Identification Number (DIN)for all the directors of the company.
For name approval, an application will be filed in Form INC-1 to the registrar of a company. Maximum six names can be provided for the name approval by the applicant. An approved name is valid for 60 days. It is required for section 8 companies to include words such as foundation, association, forum, council, chambers, etc. in accordance with the company, incorporation rules 2014.
After name approval, the next step is to draft MOA & AOA and then it is required to file it to ROC with other documents for the license under section 8 of the companies act, 2013. The MOA & AOA must be signed by the subscribers of the memorandum.
Form INC 12 is filed with the ROC for the issuance of a license to the section 8 company under the Companies Act, 2013.
With the following attachments:
After approval of the form, the license is issued in Form INC 16.
Incorporation application is filed in form INC 7 along with the following attachments:
Form INC 22 is to be filed for the situation of the registered office of the company along with the following attachments:
For the purpose of appointment of directors form DIR 2 is required to be filed with the following attachment:
After satisfying the forms filed with the ROC, the registrar shall issue the certificate of incorporation along with the unique Company Identification Number.
The following benefits can be enjoyed:
A section 8 company has a separate legal entity and is different from its members.
A Section 8 Company is exempted from paying stamp duty for registration.
A registered partnership firm may be a member in its own capacity.
Many tax benefits are granted to Section 8 Company in India.
Donors to a section 8 company are eligible for tax exemptions under section 12A and 80G of the Income Tax Act.
In case company makes any default in complying with the provisions of this section, the company shall be punishable with the fine which shall not be less than ten lakh rupees, which can be extended to rupees one crore and the directors and officer in default shall be punishable with imprisonment for a term which may extend up to three years or fine which shall not be less than twenty-five thousand rupees and which can be extended to twenty-five lakh rupees or both.
|Trust||Society||Section 8 Company|
|It is governed by the Indian Trust Act, 1882||It is governed by Societies Registration Act, 1860.||It is governed by the Companies Act, 2013.|
|Minimum two trustees are required to register a public charitable trust.||Minimum seven members are required to form a state level society.||At least 2 directors are required to register a section 8 company.|
|Change of registered office is difficult.||Change of registered office is difficult.||Change of registered office is easy.|
|Difficult to convert into the public or private company.||Difficult to convert into the public or private company.||Easy to convert into a public or private company|
|Less preferable for the grant of subsidy by the government.||Less preferable for the grant of subsidy by the government.||Most preferable|
Incorporation of Section 8 Company is similar to that of a limited company. With better laws, section 8 companies have the most reliable and strongest organizational structure. If you have any query related to incorporation of section 8 company, contact Enterslice.
Read our article: The relevance of Annual Compliance for Section 8 Company