Procedure of Section 8 Company Incorporation

Narendra Kumar

12 Jan, 2021

While incorporating an NGO with broad vision and working for the community at large the section 8 company incorporation is the most proffered mode of NGO Registration in India.

In this article, we will discuss the checklist for the incorporation of section 8 Company.

What is Section 8 Company?

Section 8 company is a Company incorporated under Section 8 of the Companies Act, 2013^[1] with the charitable objective. The main objectives of Section 8 Companies are to promote fields like arts, science, commerce, sports, education, religion, charity, etc. The profit raised by the Company is used to promote the main objective of the Company.

Section 8 Company is a non-profit organization. The profits or any income shall be used for promoting the main objective of the Company.

Who can apply for Section 8 Registration?

Any person or association of persons (including firm) or any existing company (except One Person Company) can apply for Section 8 Company Registration.

Followings are some points to be kept in mind while registering Section 8 Company:

• Section 8 Company can only be registered as Private or Public limited it cannot be registered as OPC.
• Confirm the proposed name of the company, objects to be carried by the Company, proposed registered office address, authorized capital if incorporating with the capital, proposed Director, proposed members.
• The name of the Company shall be in consonance with the principal objects of the company as set out in MOA. Whenever there is some indication of objects in name, then shall in conformity with the objects mentioned in MOA.
• The proposed name should not fall under the category of undesirable names specified in Rule of Companies Act.
• The name should include the words like Foundation, Forum, Association, Federation, chambers, confederation, council, Electrol Trust, etc.
• The object should be promoting fields like arts, science, commerce, sports, education, religion, charity, etc.
• The company shall prohibit the payment of dividend to its member.
• License from Central government is required.

Procedure for Section 8 Company Incorporation

Application for DSC:

All the proposed Directors and promoters shall apply for the Digital Signature Certificate. They should obtain DSC by applying to the Authority.

Application for DIN:

After obtaining the DSC now, the proposed directors shall apply for Director Identification Number in form DIR-3.

Reservation of Name:

Now, the applicant of the Company shall apply for the proposed Company name approval. The application for name approval shall be filed in Form INC-1. While applying for the name the applicant shall comply with the provisions of the Companies Act and Rules thereon. The approval received from ROC is valid for 60 days from the date of approval.

Finalize draft MOA and AOA of the Proposed Company:

After approval of Name, now the application for a license shall be prepared. The first step is to draft the MOA and AOA of the proposed company. The MOA shall be in accordance with the objective and provisions of Act. The MOA and AOA shall be signed by the subscriber to MOA.

Final Application for License:

The final application to grant license shall be made in Form INC-12 with the registrar. The Form shall accompany the following documents:

• INC 13 (Memorandum of Association of Proposed Company);
• The Article of Association of prosed Company;
• INC 15 (Declaration by subscribers of the MOA);
• Statement of Income & Expenditure for the next three years;
• List of proposed directors of the company;
• Subscriber page of MOA & AOA should be handwritten by subscriber and witness.

After satisfaction of an application, the license is being issued in Form INC 16.

Application for Section 8 Company Incorporation

After the issue of license now an application for incorporation section 8 company shall be made in Form INC 7:

• Memorandum of Association of the Company;
• The Article of Association of the Company;
• Declaration by professional in form INC 8;
• Affidavit by each subscriber of the memorandum in form INC 9;
• Address Proof of the subscribers;
• Identity proof of subscribers;
• Specimen Signature in Form INC 10;
• PAN card;
• NOC if there is any change in the name of promoters after name approval;
• Board Resolution authorizing to subscribe to MOA and other documents if any.

Application for Registered Office

Now, the application for registered office shall be filed in INC-22 with the registered office address and Rent agreement/lease agreement, Electricity Bill and NOC.

Read our article: Checklist for Incorporation of Section 8 Company