Advantages of Section 8 Company Registration in India
Following are the advantages of Section 8 Company Registration in India:
1. Separate Legal Entity:
These types of companies in India are considered as a separate legal entity, which means that they can own property, sue or be sued in their name, and enter into contracts.
2. More Trustworthy & Credibility:
Due to its non-profit nature, Section 8 Companies are often viewed as more credible & trustworthy than other types of Companies.
3. Nil Stamp Duty:
These Companies are exempted from paying stamp duty on their Registration Documents.
4. Minimum Share Capital:
These companies don’t have any minimum capital requirement.
5. No Minimum Capital is Required:
In India, Section 8 Companies do not have a minimum capital requirement and they can adjust their capital structure as per their growth and give them more flexibility.
6. Exemption to Donors:
Tax exemption is only allowed to the donations received by the Section 8 Company under Section 12A & 80G of the Income Tax Act.
Eligibility Criteria for Section 8 Company Registration in India
Following is the eligibility criteria for Section 8 Company Registration in India:
- At least 1 Director is required and he or she should be a resident of India
- HUF, an individual is eligible to commence a Section 8 Company in India
- The objective of the Company should be one or more of the following – the advancement of science & art, social welfare, promotion of sports/arts, and financial support to lower-income groups
- 2 or more individuals who will act as Directors/Shareholders should fulfill all the compliance & requirements of the Section 8 Company Registration under the Companies Act
- Directors, founders, and Members Directors of the Company cannot draw any remuneration in any form of cash or kind
- No profit should be shared or distributed among the Directors & members of the Company indirectly/directly
Requirements for Section 8 Company Registration
Following are some vital requirements for Section 8 Company Registration:
1. Directors:
For Section 8 Company Registration in India, a minimum of 2 Directors are required.
2. Capital Requirement:
There is no minimum paid-up capital for the Registration of Section 8 Company. NGOs in India established as a Section 8 company need not use the words Private Limited or Limited in their name.
3. Management:
Section 8 Company is managed by the BoD (Board of Directors) as per AoA & MoA of the Company, unlike other Trusts that are handled by the Trustees as per the Trust Deed.
4. Regulation under various Acts:
Section 8 Company needs to follow the Rules & Regulations prescribed under the Companies Act, 2013. It needs to file returns & maintain Books of Account with ROCs. Section 8 Company can’t make any alterations to the provisions of Memorandum of Association (MoA) & Articles of Association (AoA) without prior consent of the Central Government and it should follow the provisions of the GST Law & Income Tax Act.
5. Charitable Objects:
In India, Section 8 Companies are registered with non-profit objectives. The AoA & MoA must mention the purpose for which it is set up. Any profits earned by the Section 8 Company is utilised for the furtherance of its main objectives i.e., charitable purposes in the Company. The profits will not be distributed among its members.
6. DSC and DIN:
DSC or Digital Signatures of all the proposed Company’s Directors are necessary for the Registration because the forms for the Registration process are filed online & should be digitally signed. Apart from DSC, you need to apply for DIN for the Directors and the application for allotment of DIN must be filed in Form DIR-3 or along with the SPICe+ Form for the Registration.
Documents Required for Section 8 Company Registration
Following are some crucial documents required for Registration of Section 8 Company:
Identity/Address proof of Directors or Shareholders:
- Passport size photographs of Directors/Shareholders
- Copy of DL or Voter ID
- Copy of latest bank statement & utility bills
- Copy of Aadhar Card
- Copy of Passport (In case of NRI or Foreign National)
Address proof of Registered Office:
- Copy of latest electricity bill or water bill or gas bill (not older than 2 months)
- In case of rented office, Rent Agreement is required
- NOC from the property owner
Other Documents:
- MoA & AoA
- Consent of Nominee (INC-3)
- DSC (Digital Signature Certificate)
- Declaration by the 1st Director Subscriber (an affidavit is not required)
- Copy of Incorporation Certificate of an overseas corporate body (if any)
- A Resolution passed by the promoter company
- Declaration of unregistered companies
- Residential & identity proof of subscribers & nominees
