Section 8 companies are those companies which are incorporated with a goal to promote arts, commerce, charity, sports, welfare, environment protection, education, medicines, etc. The company’s income or money raised by doing events, receiving donations can’t be used for paying out dividends among the members of the company. The money raised should be used for the purpose of promotional and charitable.
Section 8 companies can get their incorporation certificate from the Central Government and are liable to carry on according to rules given by the government. If the company fails to fulfill the rules and compliances described by the government it may lead to winding up of the company by the order of the government.
What are the procedures of incorporation of a Section 8 Company?
1. At First you need to book the name of the proposed company by filing the Part A of the Spice+ form. Choose the nature of business activity and file two names of your choice if the names get rejected by the Central Registration Centre them again file with two new names within fifteen days from the rejection date.
2. Do Apply for Digital Signature of directors and all members. Note: All the members and Directors should have DSC since all the forms of incorporation are online.
3. Once the proposed name gets reserved you get a window of twenty days to file the incorporation form which Spice Plus along with concerned attachments. Spice+ is an advanced e-form which is a combination of eight forms in one. You can apply for all the following list mentioned below with this spice+ form:
- Name Reservation
- Apply for Director Identification Number (DIN)
- PAN Application
- TAN Application
- Incorporation
- ESIC Registration
- EPFO Registration
- GSTIN Registration
4. After above work completion you need to file the Spice + form’s part B. Here you need to provide the entire members and director’s full details. In Addition, you also need to provide the details of the authorized share capital, paid-up share capital and registered address of the company. All these details need to be filed with proper and correct attachments.
5. Fill the AGILE form for procuring the Goods and Service Tax Identification Number.
6. After all the steps above attach the concerned signatures and upload it to Ministry of Corporate Affairs website.
7. After the company gets approval form Registrar of Companies and the Certification of Incorporation, then the company needs apply hunt up for approval for commencing the business (INC-20A) within 180 days from the date of incorporation.
Is it compulsory for Section 8 Company to add suffix such as limited or private limited?
The Section 8 Companies should not add any suffix like limited or private limited but according to the rule 8(7) of Companies (Incorporation) Rules 2014 , the name of the company should contain terms like Foundation, Chambers, Federation, Trust, Forum, Association ,Confederation, etc.
What are the Documents and Details required for registration Section 8 Company?
- Digital Signature of the members.
- Director Identification Number (DIN).
- Memorandum of Association.
- Articles of Association.
- Passport size photographs.
- Email-id & Mobile no. of Company and Members
- Pan Card.
- Identitiy Proof of all the members (e.g. Voter ID/Passport/Driving License).
- Details of the First Directors.
- Address Proof (Electricity Bill, Property Tax).
Myths about incorporation of Section 8 Company
1. Affidavit of the directors in form number INC 15 is required.
A self-declaration with regards to the matter stated in form number INC 15 is sufficient and is accepted.
2. INC 33 & INC 34 are applicable in Section 8 Company
Physical copy of the Memorandum of Association and Articles of Association duly signed by the members and witnesses (Professional) along with estimated income and expenditure statement of three years should be attached with the form.
3. MoA and AoA should be notarized.
Memorandum of Association and Articles of Association may not essentially be notarized.
4. The government fee is too high.
Most of the states in India the stamp duty of Section 8 Company with respect to stamp duty of Memorandum of Association and Articles of Association are very nominal.