Section 8 Company is named Section 8 of the Companies Act, 2013, which pertains to a established ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company or Section 25 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.
A Section 8 Company is similar to a Trust or Society; expect, a section 8 Company is registered under the Central Government’s Ministry of Corporate Affairs. Trusts and Societies are registered under State Government regulations. A section 8 company has various advantages when compared to Trust or Society like improved recognition and better legal standing. Section 8 company also has higher credibility amongst donors, Government departments and other stakeholders.
Section 8 Company Registration Process
Step 1: Section 8 Company Registration
You can register a Section 8 Company in 20 to 30 days, subject to ROC processing time.
Step 2: Obtaining DSC & DIN
Digital Signature Certificate(DSC) and Director Identification Number(DIN) is required for the proposed Directors of the Section 8 Company. DIN and DSC can be obtained for the proposed Directors within 5 to 7 days.
Step 3: Name Approval & License
Once DIN and DSC are available for atleast two Directors, application for reservation of name for section 8 company can be made to MCA. Once, the name is reserved, a license must be obtained prior to incorporation.
Step 4: Section 8 Company Registration
Once the license is obtained, registration documents can be submitted to the MCA along with an application for registration. MCA will usually approve the application for incorporation in 5 to 7 days, subject to their processing time.
Frequently Ask Questions (FAQs)
|1||How many people are required to register a section 8 company?|
|A minimum of two people are required to register a section 8 company in India.|
|2||What are the requirements to be a Director?|
|The Director needs to be over 18 years of age and must be a natural person. There are no limitations in terms of citizenship or residency. Therefore, even foreign nationals can be Directors in a Indian Section 8 Company.|
|3||Is an office required for starting a Section 8 Company?|
|An address in India where the registered office of the Company will be situated is required. The premises can be a commercial / industrial / residential where communication from the MCA will be received.|
|4||Do I have to be present in person to incorporate a Section 8 Company?|
|No, you will not have to be present at our office or appear at any office for the registration of a Section 8 Company. All the documents can be scanned and sent through email to our office. Some documents will also have to be couriered to our office.|
|5||What are the documents required for registration?|
|Identity proof and address proof is mandatory for all the proposed Directors of the Section 8 Company. PAN Card is mandatory for Indian Nationals. In addition, the landlord of the registered office premises must provide a No Objection Certificate for having the registered office in his/her premises and must submit his/her identity proof and address proof.|
|6||How long will it take to incorporate a Section 8 Company?|
|You can incorporate a Section 8 Company for in 20-30 days. The time taken for registration will depend on submission of relevant documents by the client and speed of Government Approvals. To ensure speedy registration, please choose a unique name for your Company and ensure you have all the required documents prior to starting the registration process.|
|7||How long is the registration of the Company valid for?|
|Once a Company is incorporated, it will be active and in-existence as long as the annual compliances are met with regularly. In case, annual compliances are not complied with, the Company will become a Dormant Company and maybe struck off from the register after a period of time. A struck-off Company can be revived for a period of upto 20 years.|
|8||What is a Digital Signature Certificate?|
|A Digital Signature establishes the identity of the sender or signee electronically while filing documents through the Internet. The Ministry of Corporate Affairs (MCA) mandates that the Directors sign some of the application documents using their Digital Signature. Hence, a Digital Signature is required for all Directors of a proposed Section 8 Company.|
|9||What is Director Identification Number (DIN)?|
|Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.|
|10||Can NRIs / Foreign Nationals be a Director in a Section 8 Company?|
|Yes, a NRI or Foreign National can be a Director in a Section 8 Company after obtaining Director Identification Number. However, atleast one Director on the Board of Directors must be a Resident India.|
Advantages Of Section 8 Company Registration
Separate Legal Entity:
A section 8 company is a legal entity and a juristic person established under the Act. Therefore, a section 8 company has wide legal capacity and can own property and also incur debts. The members (Directors) of a section 8 company have no liability to the creditors of a section 8 company.
A section 8 company has ‘perpetual succession’, that is continued or uninterrupted existence until it is legally dissolved. A section 8 company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.
A section 8 company enjoys better credibility when compared to Trusts and Societies. Section 8 companies are registered and monitored by the Central Government. Trusts and Societies are on the other hand registered and monitored by State Governments.
The Board of Management of a section 8 company can be easily changed by filing simple forms with the Registrar of Companies. The Board of Management of a section 8 company controls all the activities of the section 8 company.
A section 8 company being a juristic person, can acquire, own, enjoy and alienate, property in its own name. No member can make any claim upon the property of the section 8 company or use it for personal or for-profit purposes.
Limited Liability means the status of being legally responsible only to a limited amount for liabilities of the section 8 company. In a Section 8 Company, the members are not held personally responsible for the liabilities of the section 8 company.
Capacity to sue and be sued:
To sue means to institute legal proceedings against or to bring a suit in a court of law. Just as one person can bring a legal action in his/her own name against another in that person’s name, a section 8 company being an independent legal entity can sue and also be sued in its own name.
A section 8 company has a structured incorporation process and required annual compliances. Hence, it is easier for a section 8 company to obtain other registrations like FCRA registration, as it is better valued and recognized by other Government Departments.
- Making a Company ,
- Not for Profit Company ,
- Section 8 Company