A Comprehensive Guide to Section 8 Company Registration in India
In India, Section 8 Company Registration is a popular choice among organizations aiming to make a positive social impact while enjoying the benefits of a legal entity. This unique legal structure, governed by the Companies Act, 2013, allows non-profit organizations to operate with a philanthropic objective without the intention of making profits. If you're considering starting a Section 8 company, this guide will walk you through the essential aspects of the registration process.
Understanding Section 8 Company:
A Section 8 Company, also known as a not-for-profit or a non-profit organization, is formed primarily for promoting art, science, commerce, education, research, social welfare, religion, charity, protection of the environment, or any other similar objective. Unlike other types of companies, a Section 8 company prohibits the distribution of profits among its members and instead utilizes any surplus towards the advancement of its objectives.
Key Features and Benefits:
Limited Liability: Members of a Section 8 company enjoy limited liability protection, meaning their personal assets are safeguarded against the company's debts and liabilities.
Tax Exemptions: Section 8 companies are eligible for tax exemptions under the Income Tax Act, making it an attractive option for those seeking to contribute to social causes without the burden of excessive taxation.
Perpetual Succession: The company enjoys perpetual succession, meaning its existence is not affected by the death or departure of its members. This ensures continuity in pursuing its objectives.
Credibility and Recognition: Being registered under Section 8 adds credibility and legitimacy to the organization, enhancing its ability to attract funding, partnerships, and support from stakeholders.
Registration Process:
The process of registering a Section 8 company involves several steps:
Name Reservation: The first step is to select a unique name for the company and ensure it complies with the naming guidelines prescribed by the Ministry of Corporate Affairs (MCA). The name should reflect the organization's objectives and should not resemble the name of any existing company or trademark.
Drafting Memorandum and Articles of Association: The next step involves drafting the Memorandum of Association (MOA) and Articles of Association (AOA) of the company, outlining its objectives, rules, and regulations governing its operations.
Application for License: Unlike other types of companies, a Section 8 company requires a license from the Central Government. The application for the license should be submitted to the Registrar of Companies (ROC) along with the necessary documents, including the MOA, AOA, and a detailed project report.
Incorporation: Once the license is obtained, the company can proceed with the incorporation process by filing the incorporation documents, including Form INC-12, with the ROC.