What is Section 8 Company
A Section 8 company is a type of non-profit organization that is incorporated under Section 8 of the Companies Act, 2013 in India. This type of company is established for promoting various charitable, social, or educational objectives and the profits or income of the organization is used solely for promoting these objectives.
Section 8 companies are registered with the Registrar of Companies (ROC) in India and must obtain a license from the Central Government before they can commence their operations. These companies do not have a share capital and their members are known as “guarantors” instead of shareholders. The guarantors provide a guarantee to the company for a specific amount in case the company winds up. It is also known as a Non-Profit Company (NPC). These companies are formed with the objective of promoting social welfare, education, charity, religion, art, science, sports, or any other similar object.
This type of company have certain benefits such as exemption from paying stamp duty on registration, easier and quicker section 8 registration process, and tax exemptions under the Income Tax Act, 1961. However, they are also subject to certain restrictions such as limitations on the distribution of profits and restrictions on changing their objectives.
To Register a Section 8 Company You Need to Follow These Steps
- Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN): – The first step is to obtain a DSC and DIN for all the proposed directors of the company.
- Name Approval :- You need to apply for name approval of the company to the Ministry of Corporate Affairs (MCA). The proposed name should not be identical or similar to any existing company or trademark.
- Memorandum and Articles of Association:- Once the name is approved, you need to draft the Memorandum and Articles of Association of the company. The MOA and AOA should include the objectives and rules of the company.
- License under Section 8:- You need to apply for a license under Section 8 of the Companies Act, 2013. This license is issued by the Registrar of Companies (ROC).
- Registration of the Company:- After obtaining the license, you need to register the company with the ROC.
Documents required for Section 8 Company registration:
- PAN Card of the proposed directors
- Identity and Address proof of the proposed directors
- Residential proof of the proposed directors
- Address proof of the registered office
- NOC from the owner of the registered office
- Memorandum and Articles of Association
- License under Section 8
Once the registration process is complete, you can start operating as a Section 8 Company kolkata. It is important to note that a Section 8 Company cannot distribute its profits among its members. Any income generated by the company should be used for the promotion of its objectives.