Introduction
A Section 8 Company is a type of company established with the purpose of promoting activities such as commerce, art, science, sports, research, education, religion, environmental protection, charity, or any other socially beneficial objective. Its income and profits are utilized solely to advance these objectives, and it is prohibited from distributing dividends to its members.
Governing Law:
In India, Section 8 Companies are governed by the Indian Companies Act, 2013 (along with its amendments) and the associated rules and regulations. The Ministry of Corporate Affairs (MCA), through the Registrar of Companies (RoC), oversees their registration and administration.
Section 8 Companies are similar in purpose to Trusts and Societies, but unlike them, which are registered under state laws, Section 8 Companies are registered under the central authority (MCA). This central registration provides several advantages, including higher credibility among donors, government authorities, and other stakeholders. Notably, Section 8 Companies are not required to include “Limited” or “Private Limited” in their name.
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Advantages of Registering a Section 8 Company in India
The Companies Act, 2013 specifies the following prerequisites for registering a Section 8 Company:
1. Documents Needed
Directors: Minimum 2 directors are required.
Members: At least 2 members for a Private Limited and 7 members for a Public Company.
PAN Card: Self-attested PAN cards of all members and directors.
Identity Proof of Directors: Any one of Passport, Voter ID, Aadhaar Card, or Driving License.
Address Proof of Directors: Self-attested document not older than 2 months (Bank Statement, Electricity Bill, Telephone Bill, or Mobile Bill).
Photographs: Two recent colored passport-sized photos of each member and director.
Business Address Proof: Property ownership documents, lease/rent agreement, NOC from owner, or utility bills (Electricity, Mobile, or Telephone) not older than 2 months.
2. Information Required
Authorized and Paid-up Share Capital: Details of proposed capital and the number of shares subscribed by members. (Minimum capital of ₹5,00,000 for a public company with at least 10 members).
Personal Details of Members and Directors: Place of birth, duration of stay at current residence, occupation, educational qualifications.
Proposed Object/Business: Clearly defined objectives or purpose of the company.
Contact Details: Email IDs and phone numbers of all members and directors.
This ensures all statutory and legal requirements are fulfilled for a smooth incorporation of a Section 8 Company.
The Ministry of Corporate Affairs (MCA), through its notification dated 18th February 2020 (effective from 23rd February 2020), amended the Companies (Incorporation) Rules, 2014. The earlier Form INC-32 (SPICe) was replaced with the web-based SPICe+ along with other procedural updates. The registration process is as follows:
1. Application for Name Reservation
The first step is to reserve a name for the company using the SPICe+ web service available at www.mca.gov.in. Before applying, ensure that the proposed name:
SPICe+ is an integrated form divided into Part A and Part B. Company names are reserved in Part A, while Part B can be used for simultaneous incorporation and other services.
2. Filling Part B of SPICe+
Part B of SPICe+ collects details for incorporation and requires submission of the following attachments:
Memorandum of Association (Form INC-13)
Articles of Association
Declaration (Form INC-14) by a practicing CS/CA/CMA stating that MOA and AOA comply with Section 8 of the Companies Act
Projected income and expenditure for the next 3 years with sources and usage of funds
Grounds for application and brief description of proposed activities
Statement of assets and liabilities
Declaration by applicants (Form INC-15) confirming compliance with Section 8
List of promoters and proposed directors (including DIN or PAN)
Application for license
Consent to act as Director (DIR-2)
3. Conversion of SPICe+ Form to PDF
After filling Part A and B, convert the SPICe+ form into PDF format to affix the Digital Signature Certificate (DSC).
4. Fill AGILE-PRO
The AGILE-PRO form is required for:
The completed AGILE-PRO form also needs to be converted to PDF and affixed with DSC.
5. Upload Forms on MCA Portal
Once all forms have DSCs, they must be uploaded on the MCA portal as per the prescribed procedure.
6. Declaration of Subscribers and First Directors
A declaration listing all subscribers and first directors of the company is automatically generated in PDF via Form INC-9 and must be submitted electronically.
After successful registration:
The Section-8 Company can legally pursue objectives such as commerce, art, sports, education, charity, or environmental protection.
No dividend is paid to members.
The company enjoys all advantages of a limited company, including credibility among donors, stakeholders, and government authorities.
For further guidance on Section-8 Company registration, professional assistance can simplify the process and ensure compliance with all legal requirements.
