Who is Eligible for Section 8 Company Registration?

Section 8 Company Registration

In India, a Section 8 company registers under the Companies Act, 2013, primarily to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other similar objectives. The company applies its profits, if any, or other income to promote these objectives, and it does not pay dividends to its members. This unique status makes a Section 8 company an attractive option for various entities focused on social causes. This article explores who can register a Section 8 company and the key aspects of the registration process.

What is Section 8 Company Registration?

Registering a Section 8 company refers to the legal process under Section 8 of the Companies Act, 2013. Entities form this type of company to promote non-profit activities such as social welfare, charity, education, and environmental protection, among others. Due to their non-profit nature, Section 8 companies enjoy various benefits, including tax exemptions and relaxed compliance requirements.

Eligibility Criteria for Section 8 Company Registration

Certain criteria must be met to be eligible for Section 8 company registration. These criteria ensure that the company focuses on non-profit activities and meets the legal requirements.

1. Objectives of the Company

The primary eligibility criterion for Section 8 company registration is that the company’s objectives must be aligned with the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other similar objectives. The company must not intend to make profits or distribute dividends to its members.

2. Intention to Apply Profits Towards the Objectives

The company must have a clear intention to apply its profits, if any, or other income solely towards the promotion of its stated objectives.

3. Formation by Individuals or Entities

Section 8 company registration can be initiated by:

  • Individuals: Any individual who is capable of entering into a contract can form a Section 8 company.
  • Associations or Societies: Pre-existing associations or societies that are involved in non-profit activities can also convert themselves into Section 8 companies to avail the benefits of corporate status and better regulatory framework.

4. Minimum Number of Members

For a Section 8 company registration:

  • Private Limited Company: A minimum of two members is required.
  • Public Limited Company: A minimum of seven members is required.

5. Resident Director Requirement

The company must have at least one director who is a resident of India, meaning that the individual has stayed in India for a total period of not less than 182 days in the previous calendar year.

Documents Required for Section 8 Company Registration

To proceed with Section 8 company registration, the following documents are typically required:

  1. PAN Card: PAN card copies of all the directors and shareholders.
  2. Identity Proof: Voter ID, passport, or driving license of the directors and shareholders.
  3. Address Proof: Latest bank statement, telephone bill, electricity bill, or gas bill of the directors and shareholders.
  4. Photographs: Passport-sized photographs of the directors.
  5. Digital Signature Certificate (DSC): Digital signatures of one of the directors to sign the forms.
  6. Director Identification Number (DIN): DIN of all the directors.

Process of Section 8 Company Registration

The process of Section 8 company registration involves several steps, from obtaining the necessary documents to receiving the final certificate of incorporation. Here’s an overview of the process:

1. Obtain Digital Signature Certificate (DSC)

The first step is to obtain the DSC for the proposed directors of the company.

2. Apply for Director Identification Number (DIN)

Next, you need to apply for the DIN for all the proposed directors.

3. Name Approval

The name should not be identical or similar to an existing company’s name and should not violate any trademarks.

4. Drafting Memorandum and Articles of Association

Subsequently, draft the Memorandum of Association (MoA) and Articles of Association (AoA) of the company. These documents outline the objectives and rules governing the company’s operations.

5. Filing of Forms with RoC

Then, file the required forms with the RoC, including:

Application for License under Section 8.
Memorandum of Association.
Declaration by a practicing Chartered
Accountant/Company Secretary/Cost Accountant.

Form INC-15: Declaration by each person making the application.
Form INC-9: Affidavit from each director and subscriber.

6. Issuance of License

Upon successful verification of the documents and forms, the RoC will issue a license under Section 8. This license allows the company to function as a Section 8 company.

7. Certificate of Incorporation

Finally, the RoC issues a Certificate of Incorporation, signifying the formation of the Section 8 company. This certificate serves as conclusive evidence of the company’s registration.

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By meeting the eligibility criteria and following the proper registration process, individuals and organizations can gain legal recognition, tax exemptions, and enhanced credibility that come with company status. Understanding eligibility for Section 8 company registration and navigating the process effectively can lead to the successful establishment and operation of a non-profit entity dedicated to social welfare and development.