Section 8 Company Registration A Practical Approach

In India if you wish to register a Non- profit Organization it can be done in three forms;

·         Trust

·         Society and

·         Section 8 Company

In India Section 8 Company is the most preferred business structure for NGO registration. In this article we will discuss about what a Section 8 Company is and how can it be registered.

Basic attributes of a Section 8 Company Registration

If you are planning to set up a non-profit organization via Section 8 Company Registration following attributes must be known before initiating Section 8 Company registration;

• Minimum two directors and two shareholders are required for Section 8 Company registration.
• Section 8 company registration cannot be done as an OPC. It can only be registered as either as a private company or a public company.
• Section 8 company registrations cannot be done with profit making objective as it operates with charitable objects.
• Proposed name for Section 8 Company registration must not be undesirable or shall not be offensive to any group of people.
• Words like Association, Foundation, forum, Council, forum etc. must for part of the proposed name for Section 8 Company registration.
• The name must reflect the activity to be undertaken after Section 8 Company registration.
• Section 8 Company registration must be done with an objective of promotion and furtherance of medical facilities, education, art, culture, sports, commerce etc.
• In order to proceed with Section 8 Company registration after name approval applicant is required to acquire License from Central Government.
• Any profit cannot be distributed among the members as dividends.
• All the profits made are invested back in the organization for furtherance of its main objects.

What is Section 8 Company Registration Procedure?

STEP 1: Digital Signature Application submission

As all the forms are required to be verified and signed by the applicants thus they are required to apply for Digital Signature Certificate. All the subscriber of shares and proposed directors are required to apply for DSC and submit all the required documents along with passport size photograph of the applicant.

STEP 2: Apply for Name Reservation

The applicant shall finalize on a name for the proposed non profit organization and file for name reservation. Name reservation application is submitted via RUN service available on the Ministry of Corporate Affairs portal. Full form of RUN is Reserve Unique Name. Maximum two names can be applied for through RUN service. This application is processed within 2-3 days’ time. Once a name is approved by the authorities it will be reserved for 20 days within which time the Section 8 Company registration is required to be completed.

STEP 3: Prepare Incorporation Documents

After name approval is done prepare all the necessary documents required for Section 8 company registration. These documents include;

·         MOA

·         AOA

·         Statement of Assets and Liabilities

·         Estimated profits and loss statement for 3 years

·         List of directors

·         Dir-2 of all directors

·         Inc- 9 of all subscribers and directors

·         Declaration from professional etc.

STEP 4: Apply for License

In order to complete Section 8 company registration the applicant is required to obtain license from Central Government. Application for this license is to be filed in Form INC-12 and AOA, MOA etc. are to be submitted as attachments.

STEP 5: Submit SPICe Form

Once the License is issued in Form INC 16 to the applicant the only step left in Section 8 Company Registration is to file the Incorporation application through SPICe Form. Along with basic attachments copy of license issued shall also be attached in the section 8 company registration application.

Once the application is verified and the authorities are satisfied certificate of incorporation is issued.

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