Vivek Ranjan
Section 8 Company is governed by the Companies Act, 2013 read with section 7 of the Companies Act 2013, are entities formed for promoting charitable objectives. Unlike other companies, they operate without a profit motive and reinvest any surplus towards their stated goals. Through this article everything you need to know about incorporating and running a Section 8 Company NGO in India online easily with Compliance Calendar LLP:
Key Features of Section 8 Companies
- Non-profit Objective: Section 8 Companies exist to promote fields like education, art, science, research, social welfare, religion, and more, contributing to societal benefit.
- No Dividend Distribution: Members or shareholders cannot receive dividends. Profits are plowed back into the company’s objectives.
- Limited Liability: Members have limited liability, protecting personal assets from company debts.
Incorporation Process
Step-by-Step Guide
- Digital Signature Certificate (DSC): Obtain DSCs for all directors cum subscribers
- Name Approval in Spice+ Part: Apply for name reservation through the Ministry of Corporate Affairs (MCA)/CRC which shall be valid for up to 20 days for the Registration process.
- Memorandum and Articles: Draft web-based MoA and AoA in compliance with the Companies Act, 2013 in the form INC-31 & INC-13
- License Application: File Spice+ Part A & Part B, INC-9, INC-31, INC-13, agile pro-s and INC-22 (if applicable).
- Compliance: Ensure all required documents (DIR-2, INC-8, INC-14, INC-15, etc.) are attached along with other documents required for the License.
- Central Registration Centre (CRC): Await approval for incorporation certificate and Section 8 license.
Post-Incorporation Compliance
- INC-20A Filing with MCA within 180 days from the date of Incorporation once payment of subscribers is received in the company A/c.
- ROC Annual Filings: File annual returns, financial statements, and other required documents with the MCA.
- Board Meetings: Conduct regular board meetings as per statutory requirements but Minutes are not mandatory to maintain subject to 05.06.2015 exemption Notification of MCA.
- Audit Requirements: Get accounts audited annually by a qualified auditor.
- Income Tax Return along with 80G& 12A Compliances
- Demat of Shares only in case of Section 8 having Share Capital
Benefits of Section 8 Companies
- Legal Recognition: Gain legal status and recognition as a non-profit entity.
- Tax Benefits: Enjoy tax exemptions under Section 12AA and 80G of the Income Tax Act, 1961.
- Credibility: Enhance credibility with stakeholders due to transparent operations and non-profit motives.
Challenges and Considerations
- Regulatory Compliance: Strict adherence to legal and regulatory requirements.
- Fundraising Limitations: Restrictions on raising funds through equity or debt like other companies.
Registration of Section 8 Company requires meticulous planning and adherence to legal norms. However, the potential to contribute to societal welfare while enjoying tax benefits makes it a preferred choice for entities with philanthropic objectives.
For expert guidance on setting up and maintaining compliance for your Section 8 Company, consult with Compliance Calendar LLP well-versed in corporate law and non-profit regulations. We can streamline the process and ensure your organization operates smoothly toward its charitable goals.
FAQ: Incorporating a Section 8 Company
1. What is a Section 8 Company under the Companies Act, 2013?
- A Section 8 Company is formed to promote charitable objectives such as education, commerce, art, science, sports, research, social welfare, religion, and protection of the environment, without any profit motive.
2. What are the key documents required for incorporating a Section 8 Company?
- Memorandum of Association (MoA), Articles of Association (AoA), DIR-2, INC-8, INC-9, INC-14, INC-15, along with documents related to registered office address, subscriber information, and projected income and expenditure.
3. What is the procedure for obtaining a Section 8 Company license?
- The process involves obtaining Digital Signature Certificates (DSCs), applying for name reservation, filling e-forms such as Spice+ Part A & Part B, INC-9, INC-33, INC-34, and INC-22 (if applicable for registered office), and awaiting approval from the Central Registration Centre (CRC).
4. How long does it take to incorporate a Section 8 Company?
- The timeline varies based on compliance with document submission, CRC feedback, and processing times, typically ranging from a few weeks to a couple of months.
5. What are the compliance requirements post-incorporation for a Section 8 Company?
- Section 8 Companies must adhere to ongoing compliance obligations such as maintaining books of accounts, conducting board meetings, filing annual returns, and ensuring transparency in financial transactions.
6. Can a Section 8 Company distribute dividends to its members?
- No, Section 8 Companies are prohibited from distributing profits or dividends to their members. Any surplus generated must be reinvested towards furthering its charitable objectives.
7. How can Compliance Calendar LLP assist in maintaining compliance for Section 8 Companies?
- Compliance Calendar LLP offers expert advisory services to ensure Section 8 Companies meet all regulatory requirements, including annual compliance filings, updating statutory records, and staying abreast of regulatory changes.
For more information or personalized consultation regarding Section 8 Company incorporation and compliance, feel free to reach out to us at Compliance Calendar LLP. We are dedicated to supporting your organization's philanthropic goals with reliable legal guidance and compliance solutions.
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Vivek Ranjan
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