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SECTION 8 COMPANY REGISTRATION
Section 8 Company registration is a legal process for incorporating non-profit organizations in India under Section 8 of the Companies Act, 2013. A Section 8 Company is a company registered for the purpose of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or any other useful object.
The main objective of a Section 8 Company is to promote social welfare or to carry out activities that are in the public interest without seeking profit. These companies can also engage in commercial activities, but the profits earned must be utilized for the benefit of the society.
benefits of Registering a Section 8 Company
Registering a Section 8 Company in India offers several benefits. Here are some key advantages:
Legal Recognition
Section 8 company registration provides legal recognition and status to the organization, giving it a distinct legal identity. This recognition enhances the credibility and legitimacy of the company and allows it to operate within the framework of the law.
Limited Liability
Like any other company, a Section 8 company offers limited liability protection to its members. The personal assets of the members are not at risk in case of any financial liabilities or legal disputes incurred by the company.
Funding and Grants
Section 8 companies have access to various sources of funding, including government grants, corporate social responsibility (CSR) funds, and international donor agencies. Many funding agencies require Section 8 companies to be registered to consider them for financial support.
Perpetual Existence
Registered Section 8 companies enjoy perpetual existence, meaning they continue to exist irrespective of changes in directors or members. This ensures continuity of the company's activities and enables long-term planning and implementation of its objectives.
Organizational Structure and Governance:
Section 8 company registration formalities require the establishment of a proper organizational structure and governance mechanisms. This helps in efficient management, decision-making, and long-term sustainability of the company.
Non-profit Objectives
Section 8 companies are formed with the primary objective of promoting charitable activities, social welfare, education, science, art, or any other useful purpose. They are prohibited from distributing profits to their members, ensuring that the organization's focus remains on its social objectives.
Tax Exemptions
Registered Section 8 companies are eligible for tax benefits and exemptions. They can receive tax-deductible donations under Section 80G of the Income Tax Act, which encourages individuals and corporations to contribute to the company's cause. Additionally, income generated from the company's charitable activities may be exempted from income tax under certain conditions.
Separate Legal Entity
A Section 8 company has a separate legal entity distinct from its members. It can own property, enter into contracts, and undertake legal actions in its own name. This provides a clear distinction between the company's assets and the personal assets of its members.
Greater Opportunities for Collaboration
Registered Section 8 companies have better opportunities to collaborate with other organizations, both within India and internationally. This collaboration can lead to knowledge sharing, resource pooling, and a wider impact on social causes.
Publicity and Recognition
Section 8 companies are listed on government portals and directories, which increases their visibility and makes it easier for potential supporters, beneficiaries, and volunteers to find them. This exposure can lead to greater public recognition and support for the company's mission.
How register a Section 8 company in India
To register a Section 8 Company in India, the following steps are usually involved:
Name Reservation
An application for name reservation is filed with the Registrar of Companies.
Obtaining Digital Signature Certificate (DSC)
Obtaining Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors of the company.
Memorandum and Articles of Association
Drafting of Memorandum of Association and Articles of Association for the Section 8 Company.
Registration
An application is filed with the Registrar of Companies for incorporation of the Section 8 Company, along with the necessary documents and fees.
PAN and TAN
Applying for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) after incorporation.
Documents Required for Section 8 company registration
- Name of Section 8 Company.
- Aims and Objectives.
- Minimum two directors required.
- Electricity bill of registered office.
- NOC from the landlord.
- Details of all directors:
- Pan card.
- Identity proof (Aadhar Card/Voter Card/ Passport/ Driving License).
- Address Proof (Mobile bill/ Bank Statement/ Telephone bill/ Electricity Bill/ Aadhar Card/ Voter Card)
- Passport Size Photographs.