What is Section 8 Company?
A NGO or Non Profit Organisation is an entity that operates for promotion of art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
In India, an NGO can be registered as any of the three structures being Company under Section 8 of the Companies Act, 2013(section 25, companies act 1956), Trust or Society. In India, anybody is free to do social activities without forming an association or organization. But when an individual wants to create a group that involves volunteers, activities, and resources, it becomes important to have proper management in place. To run such companies, trusts and Societies in the correct manner, a certain set of rules need to be followed
Section 8 Company format of a NGO is most popular form of NGO in India. It is easy to register, run or manage a Section 8 Company in comparison of a Trust and a Society. Section 8 Company has limited liability and cannot make any profits. It is generally formed for promoting science, art, commerce, charity, religion or any other purpose that is useful to society. When compared to Societies and Trusts, Section 8 Companies have more benefit in the sense that they have more legal standing and better credibility among government bodies and donors.
What are key features of a section 8 company?
- Object: *It operates for common welfare of masses at large, for promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
- Profit Earning: *The objective is not to earn profit. If any profit is earned during course of its operation, the same is not to be shared among owners/members rather utilised for attaining the objects for which NGO was formed.
- Utilisation of funds and earnings: *The profits, if any, or other income is used towards promoting of specific objects of NGO. Further there is restriction on declaration of profits as dividend to members.
What are the minimum requirements to start a section 8 company?
- Minimum two shareholders;
- Minimum two Directors (Directors and shareholders can be same person);
- At least one Director shall be resident in India;
- No Minimum capital required;
- Income-tax PAN is a mandatory requirement in case of Indian nationals;
- Any one of the Identity Proof (Voter ID/Aadhar Card/Driving License/Passport); Passport is mandatory requirement for proof of identity in case of foreign nationals;
- Any one Proof of Residence (Electricity Bill/Telephone Bill/Mobile Bill/Bank Statement);
- Registered Office address proof (rent agreement along with latest rent receipt and copy of latest utility bill in the name of landlord and a no objection certificate from the owner of the premises, in case the premises are rented);In case the premises are owned by a Director and Promoters, any documents establishing the ownership such as Sale Deed/House Tax receipt etc along with the no objection certificate.
What are the additional requirements for section 8 company registration?
Multiple forms need to be filed to apply for license. The most important form is eForm INC 12 (for issuance of license under section 8 of the Companies Act, 2013). This application shall be accompanied by:
- Memorandum & Articles of Association of the proposed company;
- A declaration confirming the application by a Company Secretary in Practice on the Non – Judicial stamp paper of prescribed value;
- List of names, descriptions, addresses & occupation of the promoters as well as Board Members of the proposed company;
- A statement showing details of assets and liabilities of the company as on date with the application;
- An estimate of future annual income and expenditure of the proposed company, specifying the source of income and object of expenditure;
- A statement specifying briefly the grounds on which the application is made;
- Payment of prescribed fee Looks like too much effort? The whole process will be carried out online. You just need to upload the required documents on our encrypted Document vault and our experts will take care of all formalities for you.
Documents Required for Section 8 Company
- Identity proofs and PAN of all the Directors/Promoters
- the Consent to act as a Director in Form DIR-2
- Application for 80G and 12A certificate
- Latest passport size photographs of all the Directors/Promoters
- Rent Agreement or a Leave &License Agreement, of the registered office, if on rent
- NOC from the owner of the Registered Office
- The Utility Bills of the proposed registered office
- Details of the Director's directors in other companies, if any.
Documents Required for a Society
- A covering letter with a request to register the society under the law.
- A Memorandum of Association
- Copy of detailed Rules and Regulation of the Society
- List of all members of the Society
- Affidavits of the office bearers
- Residential proof of all the members