SECTION 8 COMPANY FORMATION
WHAT IS A SECTION 8 COMPANY
Section 8 company is a company registered under the company’s act 2013 as a limited liability company which comprises of:
a.the object of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment etc.
b. apply its profit, if any, or other income in promoting its objects,
c. Non- payment of dividend to its members.
Eligibility of section 8 company:
• An Individual or HUF is eligible to start a section 8 company.
• Two or more directors or shareholders to fulfil all the requirement and compliances.
• One director who should be resident of India.
• No profits should be distributed among the member and directors directly or indirectly.
• Founders, directors, members cannot withdraw any remuneration in form of cash or kind.
Advantage of a section 8 company:
Tax exemption:
Numerous Tax exemptions are provided to section 8 companies, specifically to the donors who are contributing to section 8 companies, they can claim the tax exemption against the donation.
No minimum capital requirement:
There is no prescribed limit for the minimum capital requirement. The capital structure can be altered at any stage.
No stamp duty payment:
It is exempt for the payment of stamp duly as applicable in case of private or public company.
Separate legal entity:
A section 8 company holds its own identity separate from its owner. It also has perpetual existence.
Credible:
A section 8 company due its strict compliances as regard to functioning has a more reliable image in comparison to other legal structures.
No title required:
unlike private limited or public limited a section 8 company does not require to use a suffix to its name.
STEPS FOR FORMATION FOR SECTION 8 COMPANY:
STEP1:
APPLY FOR DIGITAL SIGNATURE CERTIFICATE (DSC):
Documents required for applying DSC of the Director:
• ADDRESS PROOF
• AADHAAR PROOF
• PAN CARD
• PHOTO
• EMAIL ID
• PHONE NUMBER
STEP 2:
APPLY FOR DIRECTOR IDENTIFICATION NUMBER (DIN)
• APPLY FOR DIN IN SPICE FORM ALONG WITH NAME AND ADDRESS PROOF OF DIRECTOR.
• FORM DIR 3 IS FOR EXISTING COMPANIES. DIR 3 IS NOT NEEDED TO BE FILLED SEPERATELY.
• DIN FOR NEW COMPANIES CAN BE APPLIED WITHIN THE SPICE FORM FOR UP TO THREE DIRECTORS.
STEP 3:
APPLY FOR LICENSE
• FORM INC 12 IS FILED FOR THE GRANT OF LICENSE TO OPERATE AS SECTION 8 COMPANY
• INC 12 IS FILLED ALONG WITH:
INC 13: MEMORANDUM OF ASSOCIATION.
DRAFT ARTICLE OF ASSOCIATIONS.
INC 15 FOR THE DECLARATION BY EACH SUBSCRIBER TO MOA THAT THE DRAFT MEMODRADUM IS DRAWN UP WITH THE CONFORMITY OF SECTION 8 COMPANY.
ESTIMATED STATEMENT OF INCOME AND EXPENDITURE FOR THE NEXT 3 YEARS.
LIST OF PROMOTERS AND DIRECTORS OF THE COMPANY.
STEP 4:
FILE SWIPE + WITH ROC
FOLLOWING DOCUMENTS NEED TO BE SUBMITTED TO MCA:
RESERVE THE COMPANY NAME IN FIRST PART OF SPICE + FORM.
MOA AND AOA DULY SIGNED BY ALL THE SUBSCIBERS
DECLARATION FROM ALL THE DIRECTORS AND SUBSRCIBERS THAT THEY ARE NOT GUILTY OF ANY OFFENCE.
DECLARATION IN FORM INC 14 AND FORM INC 15 FROM A CHARTERED ACCOUNTANT AND EACH PERSON MAKING THE APPLICATION.
ADDRESS OF THE CORRESPONDENCE TILL THE REGISTERED OFFICE IS OFFICIAL.
ADDRESS AND IDENTITY PROOFS OF ALL THE SUBSCIBERS OF MOA AND FIRST DIRECTOR OF THE COMPANY.
PASSPORT SIZE PHOTOGRAPHS OF ALL DIRECTORS
COPY OF RENTAL AGREEMENT IN CASE THE REGISTERED OFFICE IS RENTED.
STEP 5:
FILING OF FORM:
FILE FORM INC 22 FOR THE ADDRESS OF THE REGISTER OFFICE WITHIN 30 DAYS OF THE INCORPORATION OF THE COMPANY.
FILE FORM DIR 12 WITHIN 30 DAYS FROM THE DATE OF APPOINTMENT OF DIRECTORS.
STEP 6:
CERTIFICATE OF INCORPORATION
• ON VERIFCATION THE REGISTRAR OF COMPANIES (ROC) WILL ISSUE CERTIFICATE OF INCORPORATION IN INC-11 IN 3-5 DAYS.
• AFTER RECEIVING INC -11 WE CAN COMMENCE OUR BUSINESS.
ANNUAL COMPLIANCE OF SECTION 8 COMPANY:
• Conduct a minimum of two board meeting.
• Mandatory maintenance of books of accounts.
• Preparation of financial statements.
• Audit report
• Income tax return filing
• Filing of financial statement in form AOC-4 and ROC Annual Return in Form MGT 7.
Frequently Asked Questions
yes, a section 8 company can promote another company and can also be a holding company of another company.
Yes, a section 8 company can take loan from its members and pay interest thereupon, subject to the provisions of Chapter V of the Company’s act 2013
