{"id":3045,"date":"2023-06-05T19:40:37","date_gmt":"2023-06-05T14:10:37","guid":{"rendered":"https:\/\/www.startupfino.com\/blogs\/?p=3045"},"modified":"2023-09-01T17:53:48","modified_gmt":"2023-09-01T12:23:48","slug":"online-section-8-company-registration-suitable-form-of-ngo","status":"publish","type":"post","link":"https:\/\/www.startupfino.com\/blogs\/online-section-8-company-registration-suitable-form-of-ngo\/","title":{"rendered":"Online Section 8 Company Registration \u2013 Most Suitable Form of NGO\u00a0"},"content":{"rendered":"\n

A Section 8 company registration<\/strong><\/a> in India is administered by the Ministry of Corporate Affairs<\/a> under Companies Act whereas an NGO registered as a trust or society is governed by the State Government’s registrar of state.Section 8 company registration provides additional advantages in terms of trust and society and that is why this type of company is more trusted by government agencies, donors, and other stakeholders. In this blog, we will explain the process of Section 8 Company registration in India.<\/p>\n\n\n\n

Purpose and Meaning of a Section 8 Company in India<\/h2>\n\n\n\n

A Section 8 Company is established with the primary aim of advancing non-profit objectives encompassing a variety of areas, including commerce, art, science, etc. The creation of such companies is guided by the provisions outlined in the Companies Act of 2013.<\/p>\n\n\n\n

Objectives of a Section 8 Company<\/h3>\n\n\n\n

A Section 8 company is formed with the explicit purpose of furthering endeavours that contribute to the betterment of society. This encompassing objective spectrum comprises domains such as commerce, art, science, sports, education, research, social welfare, religion, charity, and environmental protection. The company’s activities are tailored to align with these non-profit purposes, ensuring that its initiatives positively impact these spheres.<\/p>\n\n\n\n

A distinctive feature of Section 8 company registration in India is that any profits or incomes generated by the company, if applicable, are not distributed as dividends to shareholders. Instead, these profits are used to further advance its non-profit objectives.<\/p>\n\n\n\n

Laws Applicable to NGOs in India<\/h2>\n\n\n\n

In India, NGOs are subject to registration under distinct legal frameworks, which include:<\/p>\n\n\n\n

1. Trust Registration under Indian Trusts Act, 1882<\/h3>\n\n\n\n

The Indian Trusts Act, 1882 offers a legal pathway for NGOs to register as trusts. This framework allows organisations to establish a legal entity with the objective of managing certain properties for specific purposes. Trusts are required to adhere to the guidelines set forth in the Act, which detail the procedures for trust creation, administration, and dissolution.<\/p>\n\n\n\n

2. Society Registration under Societies Registration Act, 1860<\/h3>\n\n\n\n

NGOs in India can also opt for registration as societies under the Societies Registration Act, 1860. This statute provides a means for groups of individuals to form societies aimed at promoting charitable activities, science, literature, or the fine arts. Upon registration, societies gain legal recognition, and they are obligated to function according to the provisions outlined in the Act.<\/p>\n\n\n\n

3. Incorporation under Section 8 of Companies Act, 2013<\/h3>\n\n\n\n

Section 8 of the Companies Act, 2013 furnishes an avenue for NGOs to be incorporated as companies with limited liability, but without a profit motive. Organisations registered under this section must utilise their profits solely for promoting social welfare, science, art, commerce, sports, education, research, religion, charity, and other similar objectives. This legal structure provides NGOs with a distinct corporate identity while ensuring their primary focus remains on societal betterment.<\/p>\n\n\n\n

Benefits of Section 8 Company Registration in India<\/h2>\n\n\n\n

The key benefits of Section 8 company registration in India are as follows:<\/p>\n\n\n\n

1. No Minimum Capital Requirement<\/h3>\n\n\n\n

Section 8 company registration in India does not mandate a minimum capital requirement. The company’s capital structure can be adjusted as needed to accommodate growth. This flexibility allows funds to be infused later through donations and subscriptions from members and the public, facilitating a dynamic approach to funding the organisation’s activities.<\/p>\n\n\n\n

2. Tax Benefits on Section 8 Company registration in India<\/h3>\n\n\n\n

Unlike other forms of companies, a Section 8 company is not subject to the Company Auditor’s Report Order. Additionally, such companies can avail tax benefits under Section 80G of the Income Tax Act, 1961. This provision encourages philanthropy and financial support from individuals and entities by allowing them to claim deductions on their contributions.<\/p>\n\n\n\n

3. No Stamp Duty<\/h3>\n\n\n\n

The incorporation of a Section 8 company does not attract stamp duty. Unlike private or public limited companies, there is no obligation to pay stamp duty on documents like the Memorandum of Association or Articles of Association.<\/p>\n\n\n\n

4. Distinct Legal Identity<\/h3>\n\n\n\n

Upon registration, a Section 8 Company obtains a distinct legal identity separate from its members. This unique legal status allows registered partnership firms to participate as individual members and even acquire Directorship within the Section 8 company. The company enjoys perpetual existence, unaffected by changes in its membership.<\/p>\n\n\n\n

5. Limited Liability<\/h3>\n\n\n\n

The members in Section 8 companies have limited liability proportionate to their subscribed shares. They are shielded from personal liability for the company’s financial losses, ensuring their personal assets remain safeguarded.<\/p>\n\n\n\n

Requirements for Section 8 Company Registration in India<\/h2>\n\n\n\n

Given below are the essential requirements for Section 8 company registration in India:

<\/p>\n\n\n\n

Directors<\/h3>\n\n\n\n

If the Section 8 company is to be incorporated as a private limited company, a minimum of two directors is required. For incorporation as a public limited company, a minimum of three directors is necessary. There is no maximum limit on the number of members for a public limited company, while a private limited company is limited to a maximum of 200 members.<\/p>\n\n\n\n

Capital Requirement and Name<\/h3>\n\n\n\n

A significant advantage of a Section 8 company is that it does not have a requirement for minimum paid-up capital during incorporation. Additionally, NGOs registered as Section 8 companies are not mandated to include the terms ‘Limited’ or ‘Private Limited’ in their names.<\/p>\n\n\n\n

Charitable Objects<\/h3>\n\n\n\n

Section 8 companies are established with non-profit objectives at the forefront. Their Articles of Association and Memorandum of Association must explicitly outline these non-profit objectives. Any profits generated by the Section 8 company are directed towards the advancement of its core objectives, namely, charitable purposes or reinvestment into the organisation. Profit distribution among members is prohibited.<\/p>\n\n\n\n

Management<\/h3>\n\n\n\n

The management structure of a Section 8 company differs from other entities like trusts. A Section 8 company is governed by its Board of Directors as specified in the MOA and AOA, as opposed to trusts that are managed by trustees based on the Trust Deed.<\/p>\n\n\n\n

Regulation under Various Acts<\/h3>\n\n\n\n

Section 8 companies are subject to regulations outlined in the Companies Act, 2013. This includes maintaining accurate books of account and submitting returns to the Registrar of Companies. Alterations to the provisions of MOA and AOA require prior approval from the Central Government. Moreover, adherence to provisions within the Income Tax Act and GST Law is essential.<\/p>\n\n\n\n

Digital Signature Certificate and Director Identification Number<\/h3>\n\n\n\n

To initiate the registration process, obtaining a Digital Signature Certificate for the proposed directors is necessary, as online forms require digital signatures. These certificates are issued by government-recognised certifying agencies. A Class 3 category DSC is essential.<\/p>\n\n\n\n

Further, a Director Identification Number must be acquired for the proposed directors. This involves submitting Form DIR-3 or SPICe+ along with necessary documents such as self-attested PAN, Identity, and Address proofs of directors. These documents must be uploaded on the MCA Portal and attested by a qualified practitioner, such as a chartered accountant, company secretary, or cost accountant.<\/p>\n\n\n\n

Procedure for Section 8 Company Registration in India<\/h2>\n\n\n\n

The procedure for section 8 company registration is simple and clear. Given below are the steps for Section 8 company registration in India:<\/p>\n\n\n\n

Step 1: Obtain Digital Signature Certificates and Apply for DIN<\/h3>\n\n\n\n

Obtain Digital Signature Certificates for the proposed directors of the Section 8 company.<\/p>\n\n\n\n

File Form DIR-3 with the Registrar of Companies to apply for Director Identification Number for the directors. Attach proof of identity and address as required for DSC.<\/p>\n\n\n\n

 <\/h3>\n\n\n\n

Step 2: Approval and Allotment of DIN<\/h3>\n\n\n\n

Upon submission of Form DIR-3, the ROC approves the application and allots DIN to the proposed directors.<\/p>\n\n\n\n

Step 3: File Form INC-12 for Licence Application<\/h3>\n\n\n\n

File the Form INC-12 with ROC for applying for a licence for the Section 8 company. Attach the necessary documents as specified earlier in the process.<\/p>\n\n\n\n

Step 4: Issuance of Licence<\/h3>\n\n\n\n

Once Form INC-12 is reviewed and approved by the ROC, a licence under Section 8 is issued in Form INC-16.<\/p>\n\n\n\n

Step 5: Submission of SPICe+ Form for Incorporation<\/h3>\n\n\n\n

With the obtained licence, file the SPICe+ Form with the ROC for the incorporation of the Section 8 company. Attach the required documents as previously mentioned.<\/p>\n\n\n\n

Step 6: Certificate of Incorporation<\/h3>\n\n\n\n

If the ROC is satisfied, then he goes on to issue a Certificate of Incorporation and then a unique Company Identification Number is assigned.<\/p>\n\n\n\n

Final Thoughts<\/h2>\n\n\n\n

Section 8 company registration in India provides a structured path for establishing non-profit entities in India. This streamlined procedure, involving obtaining necessary DSCs, securing DINs, licencing, and final incorporation through diligent form submissions, ensures legal compliance and aligns with the company’s philanthropic objectives. The issuance of a Certificate of Incorporation and unique CIN signifies successful establishment.<\/p>\n\n\n\n

By adhering to the prescribed steps and regulations stated in this blog, Section 8 companies can start their journey to contribute meaningfully to various societal domains, benefiting from distinct legal identity, limited liability, and tax exemptions while promoting a positive impact on the community with their distinct status under Indian law.<\/p>\n\n\n\n

For more information on Section 8 company registration in India, connect with our experts at StartupFino.<\/p>\n","protected":false},"excerpt":{"rendered":"

A Section 8 company registration in India is administered by the Ministry of Corporate Affairs under…<\/p>\n","protected":false},"author":5,"featured_media":3046,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[],"yoast_head":"\nOnline Section 8 Company Registration Suitable Form of NGO<\/title>\n<meta name=\"description\" content=\"Section 8 Company Registration, you must apply for TAN and PAN. 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