Startup
Section 8 Company
A Section 8 company under the Companies Act, 2013 or a Section 25 Company as per the Companies Act,1956 is an organization registered with an objective of promoting the fine arts, science, literature, or knowledge sharing for a purposeful matter or for charity.
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A Section 8 company under the Companies Act, 2013 or a Section 25 Company as per the Companies Act,1956 is an organization registered with an objective of promoting the fine arts, science, literature, or knowledge sharing for a purposeful matter or for charity.
These are the limited companies established under the Companies Act. The Government grants these companies an exclusive license under Section 8 Companies Act. There are three main conditions for granting the license is.
- The company should form for the charitable purpose.
- Income and profits should be used towards these objects.
- The company should not pay any dividend to its members.
As per Section 8(1a, 1b, 1c) of the Companies Act, 2013, a Section 8 company can be established for the “promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object”. The Act further states that a Section 8 company can purse the above objects subject to the condition that it “intends to apply its profits, if any, or other income in promoting its objects” and “intends to prohibit the payment of any dividend to its members.”. In simple terms, a Section 8 company must promote a public cause and the proceeds generated by the entity must solely be used to support the stated public cause(s) only.
Why register Section 8 Company – Benefits
#1
has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object
#2
intends to apply its profits if any, or other income in promoting its objects; and
#3
intends to prohibit the payment of any dividend to its members, the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.
#4
the company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited companies.
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- Criteria
- Process
- Documents Required
For registering a Section 8 company, the following criteria must be fulfilled.
- Governed by: Companies Act, 2013.
- Members: Minimum of 2 Directors/Shareholders.
- Important Documents: MoA, AoA and financial statements.
- Board: Directors.
- Property management: All the properties belonging to a company are vested in the name of the company. These can be sold in conformity to the provisions mentioned in the Companies Act, 2013. The Act says the sale can be done with prior consent of the Company Board of Directors, when they pass a resolution regarding the same.
- Closure or winding up: The property and funds of the society, upon its dissolution ( as per the society by-laws) and settlement of all liabilities & debts, may not be equally distributed among the company members. Rather, the same can be transferred or given to some other company, preferably with similar objects.
- Annual compliance: The company must ensure its annual compliance by filing its annual returns and annual accounts with the RoC.
Online Section 8 company registration - A detailed process
There are three major steps in incorporating a Section 8 company apart from the document collection, preparation and drafting. They are
STEP 1: Run Approval:
- Reserve Unique Name (RUN) is a form filed for reserving a name for a new company or for changing its existing name. This is the first step of incorporating a section 8 company.
- A section 8 company shall usually have words like Foundation, Federation, Society, Council, Club, Charities, Institute, Academy, Organisation, Federation, Chamber of Commerce, Development, Association, etc.
- The name so approved shall be valid for 20 days
STEP 2: RD 1 License:
- This step is the most crucial in the process of incorporation.
- The name approval shall be valid at the time of applying for the RD 1 License.
- RD 1 license is a license granted under section 8 of companies act as they work on a specific objective which is for the upliftment of arts, science, commerce, environment, etc., and the profit they earn shall also be used towards their objectives. All crucial documents like the MoA, AoA, financial statements and other declarations are filed at this stage.
- The license so approved shall be valid for 30 days.
STEP 3: Spice Form:
- Both the name and the license shall be valid at the time of filing the SPICe form.
- This is the final stage of incorporating the section 8 company where the documents relating to the registered office like the rental agreements and utility bills are filed along with the RD-1 license and the name approval certificate.
Documents Required
- DSC and DIN of the Directors.
- Objectives and proposed work of the company.
- Financial statements like assets and liabilities, the projection for five years etc.
- Directors personal documents.
- Registered office address documents viz. rental agreement or sale deed in the name of the company, utility bills not older than two months.
Process
01
Trademark Search
We conduct a thorough search of the TM directory
01
Trademark Search
We conduct a thorough search of the TM directory
01
Trademark Search
We conduct a thorough search of the TM directory
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Section 8 Company
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On receipt of the documents we at Filing Duniya can get the trademark registration process commence in less than a day’s time. As our availability has never been an issue you can feel free to contact us over text messages, emails or call in case of any queries.
Frequently Asked Questions
- Is there any maximum limit for the number of members in the Section 8 company?
-
There is no such maximum limit.
- Can any government employees or officer be a member of NGO?
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The answer to this question is yes. Government employees or officers can be part of NGOs provided the NGO is not anti-government. There are a few rules too that these people have to follow, one of them is to make sure that the NGO is not profit making and the member must not draw any salary from the NGO.
- What are the other alternatives for starting an NGO?
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The other alternatives are to start a Trust or a Society based on the objectives of your NGO.
- How is the property of Section 8 managed?
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The property of the company vests in the name of the Company and the same can be sold as per the rules mentioned under the Companies Act, (Eg: With the consent of the Board of Directors in the form of a resolution). If there is one, check its status. If it is either approved, applied, objected or opposed, it makes sense to pick another name. Do also check for phonetic similarities with other registered names. To do this, you need to select the dropdown at the top of the page. While the phonetic search isn’t very accurate, you can say with certainty that your trademark will be approved if there aren’t any relevant matches here either.
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