2022-10-25 11:00:52

Section 8 Company

Introduction

When registered as a Non-Profit Organization then a company is referred to as a section 8 company i.e. when it the has motive of promoting arts, commerce, education, charity, protection of the environment, sports, science, and research, etc, and intends to use its profits (if any) or other income for promoting these objectives.

The income of a Non-Profit Organization cannot be used for paying out dividends to a member of the company and has to be for the promotional objective to be charitable. These companies get an incorporation certificate from the Central Government of India and are liable to adhere to the rules that are specified by the government.

According to the rules, failure to observe the responsibilities which are stated by the Central Government may lead to the winding up of the company on the government’s order. Besides, If the objective laid down by the company proves to be bogus then strict action will be taken against all the members of the company.

Who can apply for section 8 Company?

An individual or an association of individual are entitled to be registered as a Section 8 Company if it holds intentions or objectives which are given below. The objectives have to be established to the satisfaction of the Central Government of India.

When the company plans to promote science, commerce, education, art, sports, protection of the environment, etc., or alike other objectives;
When the company holds an objective to invest all the profits or any other income that is generated after incorporation in the promotion of such objects.
When the company does not plan to pay any dividends to its members.

Documents Required for the Registration of Section 8 Company

Some documents are given below for the registration of Section 8 Company:
Digital Signature Certificate
Memorandum of Association
Articles of Association
Passport Size Photographs
Aadhar Card
Passport
Voter Id
When the Members Are Other Companies/LLPs then provide the details of the Director
Address Evidence
Director Identification Number

Advantages of the registration of Section 8 Company

There are many advantages of the incorporation of Section 8 Company but some are mentioned below:

Through building the section-8 company, the purpose or aim of the company would perform any activity and get integrity and commitment because the same is being approved made by the Union government.
Concerning the operations because of its harsh or hard rules, the same poses a trustful image in front of internal and external users concerning the communities.
The authenticity of section 8 company has much more concerning to the communities and the kinds of charitable firms are added.
Grants and subsidies through the government of India and the additional institutions were recognized by the section-8 company as per the communities of trust.

Registration Process of Section 8 Company

The registration process of Section 8 Company will be given the following:

1. Name availability application in form RUN

Application for name availability should be made in the “RUN” facility. The name of Section 8 Company shall include the words Foundation, Forum, Federation, Chambers, Confederation, Council, etc. One can propose a maximum of two names at a time and one resubmission is allowed in the RUN facility. Fees for RUN is Rs. 1000/-. It is desirable to attach the matter clause of the proposed company. Once the Name is approved is valid for 20 days.

2. Getting Digital Signatures of the First Directors

The next step is to get the digital signatures of the first subscribers and directors which are required for filing the incorporation form with the ROC.

3. Preparation of MOA, AOA, and other documents

MOA is the charter of the company and explains the scope of its activities. An Article of Association is a document that regulates the internal management of the company. The Memorandum of Association of Section 8 Company should be in form INC-13 while there is no format which is prescribed for the Article of Association for Section 8 Company. One can adopt table F provisions. The Memorandum of Association & Article of Association of the company shall be signed by each subscriber who shall mention his name, address, description, and occupation in the presence of at least one witness who shall be attested by signature and add his name, address, description, and occupation.

4. Filing of SPICe 32

Form After getting the proposed name approval, one may go ahead with filing form SPICe 32. Attachments of SPICe 32: The documents required to be attached with the SPICe form for incorporation of Section 8 Company which is given following: