section8

SECTION 8

A Section 8 company is a company that is registered under the Companies Act, 2013 or a Section 25 Company as per the Companies Act,1956 with an objective to promote the fine arts, scientific activities, literary pursuits which are conducted for charitable reasons. A Section 8 Company is a limited company created under the Companies Act. The Government grants a Section 8 Company an exclusive license under the Section 8 Companies Act. The three main conditions to grant a license for A Section 8 Company are as follows:

  • The company must be formed for a charitable purpose.
  • The income and profits must be used for charitable objects
  • A Section 8 Company must not pay any dividend to its members

REQUIREMENTS FOR ONLINE REGISTRATION OF A SECTION 8 COMPANY

To register a Section 8 Company online the following requirements must be followed:

  • It is governed by the Companies Act, 2013.
  • A Section 8 company requires a minimum of 2 Directors and Shareholders for registration
  • All important documents such as the MOA, AOA and financial statements must be submitted
  • The names and list of the Board of Directors
  • All the properties that belong to a Section 8 company are registered in the name of the company. These can be sold in accordance with the provisions mentioned in the Companies Act, 2013. The Act says the sale is allowed with prior consent of the resolution passed by the Board of Directors in the Company
  • The property and funds of the society, upon its dissolution, as per the society by-laws and settlement of all liabilities & debts, will not be equally distributed among the company members. However, the same can be transferred or given to some other company which has similar objectives
  • The company must ensure its annual compliance, by filing its annual returns and accounts with the Registrar of Companies

DOCUMENTS REQUIRED TO REGISTER A SECTION 8 COMPANY

  • The DSC and DIN of the Directors
  • The objectives and proposed work of the company
  • The financial statements such as assets, liabilities, the projection for five years etc
  • The director’s personal documents
  • The registered office address documents such as the rental agreement or sale deed in the name of the Section 8 Company, utility bills that are not older than two months

BENEFITS OF REGISTERING A SECTION 8 COMPANY

  • A Section 8 Company has organised operations and greater flexibility
  • A Section 8 Company registration process is meticulous. No physical presence is needed
  • There is no requirement of a minimum paid-up capital
  • There is a seamless procurement of tax benefits under section 12AA and 80G of the Income Tax Act
  • Any partnership firm can become a member in its individual capacity, and obtain Directorship

ONLINE SECTION 8 COMPANY REGISTRATION

  1. RUN APPROVAL: The Reserve Unique Name (RUN) is a form filed to reserve a name for a new company or to change its existing name. This is the first step for incorporating a Section 8 company. A Section 8 company usually has words like Foundation/Federation/Society/Council/Club/Charities/Institute/Academy/Organisation/Federation/Chamber of Commerce/Development/Association, etc. The name that is approved is only valid for 20 days
  2. RD 1 License: This step is the most important in the process of incorporation. The name approval must be valid at the time of the RD 1 License application. The RD 1 license is a license issued under section 8 of Companies Act. This is given to a company that works with an objective for the upliftment of arts, science, commerce, environment, etc. The profit they earn will be used towards the fulfilment of these objectives. All crucial documents like the MOA, AOA, financial statements and other declarations have to be filed at this stage. The license that is approved is valid for 30 days
  3. SPICE FORM: The name and the license must be valid at the time of filing the SPICE form. This is the final stage in the incorporation of a section 8 company. All the documents related to the registered office like the rental agreements and utility bills, are filed along with the RD-1 license, and the name approval certificate

SECTION 8 COMPLIANCES

A Section 8 company must comply with the annual compliances like any other company. In case of non-compliance, the company will be treated as a dormant company, and it will be struck off from the register. A section 8 company has to do all the CSR compliances to ensure the CSR activities have been done

APPLICABILITY OF TAX EXEMPTION
There is a general belief that a Section 8 company does not need to pay tax as they work towards the welfare of the common public at large. That is not true. A Section 8 company, like any other legal entity, must pay tax. For a Section 8 Company to be exempted from Tax, it must obtain certification for the said exemptions, such as Section 12 A, 80G etc. from the Income Tax Authorities in India.

Once you get in touch with us at ACE ALLIANCE with your request to create a Section 8 Company agreement, we will start the process. After our team receives all the details, our expert team of lawyers and attorney will create the Section 8 Company agreement sample and send it across for your reference within 2- 3 business days. The price you pay for these services will includes three rounds of iterations. Therefore, if you need any changes done to the Section 8 Company agreement, our team of lawyers at ACE ALLIANCE will do the needful and then help you with the online Section 8 Company registration process