Section 8 company
Section company is nothing but one of the types of company registration. As the name itself we can understand this section of the Companies Act, 2013. The section 8 of the Companies Act, 2013 Act mentions this company registration process and procedures. It is mainly created for the purposes of commerce, art, science, social welfare, sports, fiction, education, research purposes, charity, religion, etc., It is also known as non-profit company and section 25 company. It also includes the environmental production services also. The process of section 8 company is slightly similar to the Trust or Society registration. But only one characteristic differentiate the section 8 company. The Trust or Society formation is made by the state government and the section 8 company is registered under the Central Government. From this we can understand the section 8 company having better recognition and legal protection and having the better credibility among the trust or society.
The name of the section 8 company also same procedure of naming other type of companies. It should be unique, and not existing companies names and also the already existing trademark names or proposed trademarks in Trademark Registry. The identical and similar names do not allowed by the Ministry of Corporate Affairs. If you file a similar or identical name application, the MCA will give you a re-submission of your application. It doubles the work and the costs higher. The name will get re-submission until the Ministry of Corporate Affair’s satisfaction. A company which motives to perform the charitable concept is called Section 8 Company.
Members of Section 8 Company
Section 8 company requires minimum 2 members to start an organization. The members who have completed the age of 18 years and one of the members must be an Indian citizen. The other member can be a Non-resident person or foreigners. The Indian Citizen must be resident in India also. It has the more optional way for registration process. For example, it can be registered as a private limited company or Public limited company. So, the maximum number of members can be varies based on this. If it is a private limited company, it has maximum of 200 persons as members. If it is a public limited company, there is a no limitation on members.
Advantages of Section 8 Company
- It tax returns are very less while compared to other types of companies.
- It never mentions the minimum paid up capital from the members.
- The tax deduction of section 8 companies definitely helps to the donors of that company.
- The section 8 company registration is excluded from the stamp duty charges.
- The partnership firm member can be a section 8 company member under the Companies Act, 2013.
As an entrepreneur it is not suitable for initial stage. Why because, the Section 8 Company has minimum profits and its tax returns also reduced. The big organization, which does not bother about the profits of the company, can incorporate a section 8 company.
Incorporation process of Section 8 Company
The incorporation process of section 8 company is similar to the trust and society registration. Only the difference is too registered under Central Government. The director of the Section 8 Company must need the Digital signature certificate for the purposes of signing the online forms of MCA. Also it needs the Director Identification Number (DIN).The additional license is requires to form a section 8 company not like other companies. Before this, first and foremost thing is name availability check. The unique and not identical words easily get approval from the MCA. For Section 8 Company registration, the company requires to file Form INC-1 for name availability check. To get the additional license of section 8 company needs to file a Form RD-1. After getting the additional license, the companies can eligible to file the Form INC-7, Form INC-22 and DIR-12 with respect to the rules and regulations of Ministry of Corporate Affairs. Generally, the non-profit organizations are registered as a trust or society in Register of Societies.
Documents required for Section 8 Company
The following mandatory documents are required to form a Section 8 Company.
- The identical proofs of Indian Nationals: Aadhar card, Voter ID.
- Residential Proofs like electricity Board bill (EB Bill), Mobile or Telephone bill or a bank statement.
- Income Tax purposes require PAN card
- Registered office location : If it is Rental need a rental agreement from the owner and NOC. If it is own property, need house tax bill.
- Passport of the members.
MOA and AOA
Like other companies, section 8 company needs Memorandum of Association (MOA) and Articles of Association (AOA) and Power of Attorney (POA). These above three documents are called as constitutional documents of company registration processes. These documents are fulfilled by above required documents of the individuals and required Forms of MCA.
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