Incorporate Your Social Vision: Establish a Section 8 Company with Account Assure
Are you an individual or a group passionate about making a positive impact on society through charity, art, science, education, sports, or environmental protection? A Section 8 Company is the ideal legal structure for your non-profit initiatives, and Account Assure is here to guide you.
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At Account Assure, we deeply understand the regulatory landscape and the specific compliance requirements for non-profit entities. We are dedicated to assisting individuals and organizations in seamlessly establishing their Section 8 Company, ensuring adherence to all legal provisions and fostering good governance from the outset.
How to Register as NGO – Section 8 Company in India
NGO (Non-Government Organisation) is an organization that works for non-profit/ charitable purposes. An NGO established as Section 8 company under the Companies Act, 2013 (‘Act’) is governed by the Ministry of Corporate Affairs (‘MCA’) whereas the NGO registered as a trust or society is governed by the registrar of state under the State Government.
Section 8 company registration has more benefits in comparison to trust and society. This type of company has more credibility among government departments, donors, and other stakeholders. In this article, we will explain how to register as an NGO in the form of Section 8 Company, under the Companies Act, 2013.
Section 8 Company Benefits
There are many advantages of registering an NGO under Section 8 of the Companies Act, 2013, which are as follows:
No minimum capital
There is no minimum capital requirement for a Section 8 company incorporation and the capital structure of Section 8 can be altered at any time as per the growth requirement of the company. Thus, the funds required for carrying the business operations can be brought in later, through donations and subscriptions from members and the general public.
Tax Benefits
The Company Auditor’s Report Order (CARO) does not apply to the Section 8 company. A Section 8 company enjoys tax benefits under 80G of the Income Tax Act, 1961.
No Stamp Duty
There is no stamp duty imposed for Section 8 company incorporation in India. The Section 8 company need not pay the stamp duty imposed on the Memorandum of Association (MOA) or Articles of Association (AOA) of a private or public limited company.
Separate Legal Identity
Section 8 Company registration acquires a distinct legal identity from its members. A registered partnership firm can also become a member in its individual capacity and obtain Directorship of Section 8 company. It has perpetual existence and thus, the entry or exit of any member will not affect the operation of the Section 8 company.
Limited liability
The members of the Section 8 company have limited liability as per their share subscribed. They are not personally liable for the losses of the company.
Credibility
Section 8 companies are more credible and reliable than any other form of a charitable organisation. It is regulated under the provisions of the Act, thus they need to have mandatory audits every year and the Memorandum of Association cannot be altered relating to the non-profits objectives of the company.
Exemption to the donors
The tax exemption is granted to the donations received by the section 8 company under Section 12A and 80G of the Income Tax Act, 1961.
Procedure for incorporation of a Section 8 company
Obtain a DSC of the proposed Directors of the Section 8 Company. Once a DSC is received, file Form DIR-3 with the ROC for getting a DIN. The Proof of Identity and Address Proof needs to be attached for obtaining DSC.
Once the DIR-3 is approved, the ROC will allot a DIN to the proposed directors.
File Form INC-12 with the ROC to apply for a licence for the Section 8 company along with the attachment of the required documents as mentioned above.
Once the form is approved, a license under section 8 will be issued in Form INC-16.
After obtaining the license, file the SPICe+ Form with the ROC for incorporation along with the required attachments as mentioned above.
If the ROC is satisfied with the forms submitted, he issues a Certificate of Incorporation along with a unique Company Identification Number (CIN).
Why Partner with Account Assure for Your Section 8 Company?
As a seasoned Financial Audit Firm, Account Assure offers distinct advantages for non-profit entities:
Specialized Expertise
Our team possesses a deep understanding of the unique legal, financial, and compliance requirements for Section 8 Companies.
Streamlined Approvals
We navigate the stringent approval process for the Central Government license efficiently.
Holistic Support
From initial consultation to post-incorporation tax registrations, we provide comprehensive guidance.
Specialized Expertise
Our team possesses a deep understanding of the unique legal, financial, and compliance requirements for Section 8 Companies.
Streamlined Approvals
We navigate the stringent approval process for the Central Government license efficiently.
Holistic Support
From initial consultation to post-incorporation tax registrations, we provide comprehensive guidance.
Credibility & Compliance
We ensure strict adherence to the Companies Act, 2013, and other relevant regulations, establishing a strong and credible foundation for your social mission.
Financial Foresight
Beyond incorporation, our audit background enables us to provide valuable insights into financial management, internal controls, and statutory audit requirements crucial for non-profits.
Credibility & Compliance
We ensure strict adherence to the Companies Act, 2013, and other relevant regulations, establishing a strong and credible foundation for your social mission.
Financial Foresight
Beyond incorporation, our audit background enables us to provide valuable insights into financial management, internal controls, and statutory audit requirements crucial for non-profits.
Section 8 Company Registration Eligibility
- An Individual, HUF is eligible to start a Section 8 company in India.
- Two or more persons who will act as Directors or shareholders should fulfil all the compliances and requirements of the Section 8 company incorporation under the Act.
- There must be at least one director who should be a resident of India in the Section 8 company.
- The objective must be one or more of the following – promotion of sports, social welfare, the advancement of science and art, education and financial assistance to lower-income groups.
- Founders, directors, members directors of the company cannot draw any remuneration in any form of cash or kind.
- No profit should be distributed among the members and directors of the company directly or indirectly.
Section 8 Company Incorporation Requirement
Directors
A minimum of two directors is required if the Section 8 company is to be incorporated as a private limited company, and a minimum of three directors in case of incorporation as a public limited company. The maximum number of members is 200 in the case of a private limited company, whereas for a public limited company, there is no such limit.
Capital Requirement and Name
There is no requirement of minimum paid-up capital in the case of a Section 8 company incorporation. NGOs established as a Section 8 company need not use the words ‘Limited’ or ‘Private Limited’ in their name.
Charitable Objects
Section 8 companies are incorporated with non-profit objectives. The MOA and AOA must mention the non-profit objective or purpose for which it is established. Any profits earned by the section 8 company is utilised for the furtherance of its main objectives, i.e. charitable purposes or reinvested in the company. The profits will not be distributed among its members.
Management
Section 8 company is managed by the Board of Directors as per the MOA and AOA of the company, unlike other trusts that are managed by the Trustees as per the Trust Deed.
Regulation under Various Acts
A Section 8 company needs to follow the rules and regulations prescribed under the Companies Act, 2013. It needs to maintain books of account, and file returns with the Registrar of Companies. Section 8 company cannot make any changes to the provisions of MoA and AoA without the prior approval of the Central Government. It also needs to follow the provisions of the Income Tax Act and GST Law.
Obtain DSC (Digital Signature Certificate)
Digital signatures of the proposed directors of the company are required as the forms for the registration process are filed online and should be digitally signed. Digital signature certificates (DSC) are issued by a government recognized certifying agencies. The list of such certified agencies can be accessed here. The cost of obtaining a DSC varies depending upon the certifying agency. You must obtain a Class 3 category DSC.
Apply for Director Identification Number (DIN)
You have to apply for a DIN for the proposed directors of the company. The application for allotment of DIN has to be made in Form DIR-3 or along with the SPICe+ form for registration. You have to attach the scanned copy of the necessary documents such as a self-attested copy of PAN, Identity and Address proof of directors along with the form and submit it online on the MCA Portal. The form must be attested by a practising professional who can be a chartered accountant, a company secretary, or a cost accountant.
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