Incorporation of Section 8 Company Under Companies Act, 2013: A Guide

A Section 8 Company under the Companies Act, 2013, is a non-profit organization established for charitable purposes such as promoting commerce, education, social welfare, and environmental protection. This type of company must apply its profits toward its objectives and is prohibited from distributing dividends to its members. The incorporation process involves several steps: first, filing a Name Reservation Application through the MCA V3 Portal, followed by obtaining a Class 3 Digital Signature Certificate for the first directors. Next, the incorporation application is submitted using the SPICe+ Part B form, accompanied by essential documents like the Memorandum and Articles of Association, consent declarations, and proof of registered office. Upon approval by the Registrar of Companies (ROC), a license and Certificate of Incorporation are issued. Key documents required include identification for directors, a statement of estimated income and expenditure, and various proofs related to the registered office. Section 8 Companies benefit from certain exemptions under the Companies Act, potential tax benefits for the organization and its donors, no minimum capital requirement, and enhanced credibility compared to other non-profit structures like trusts or societies.

A. Formation of Companies with Charitable Objects

A Section 8 Company under Companies Act, 2013, a person or an association of persons proposed to be registered under this Act as a limited company—

(a) 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;

(b) intends to apply its profits, if any, or other income in promoting its objects; and

(c) intends to prohibit the payment of any dividend to its members,

B. Steps to followed to incorporate a section 8 Company

1. Name reservation Application:

• • The First Step is to file Name Reservation Application with maximum 2 proposed Company name through E-Form Spice+ Part A by paying a fee of Rs.1000/- on the MCA V3 Portal.
  • The name shall contain the Words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust etc.

2. Get Digital Signature Certificate

• • The next step is to obtain the class 3 digital signature of the first Director and subscribers.
  • DSC is required for filling of Incorporation forms to the CRC(ROC)

3. Filling of Form SPICe+ Part B

• • The next step is to file the incorporation application by using the SPICe+ Part-B Form along with INC-13 (e-MOA), INC-31 (e-AOA), INC-9 (Declaration by Subscribers and First Directors) and INC-35 (AGILE‐PRO-S) by paying of Applicable Stamp Duty, PAN, TAN Fees.
• Note: Remove Point No. 80 to 88, 90 from E-AOA

4. Get License & COI

After Filling of Application, the ROC(CRC) examine the application and if it is satisfied with the application, a license under Section 8 and the Certificate of Incorporation will be issued as per the provisions of the Companies Act, 2013.

C. Documents to be attached for Incorporation of Section 8 Company:

1) Consent and Declaration by first Directors in Form DIR-2;

2) Copy of PAN card & Aadhar card of first directors and subscribers;

3) Declaration by CS/CA/CWA in practice, that the draft MOA & AOA have been drawn up in conformity with the provisions of Section 8 and rules made thereunder and that all the requirements of the Act and the rules made thereunder relating to registration of the company under Section 8 and matters incidental or supplemental thereto have been complied with;

4) A statement of estimated income & expenditure for next three years;

5) Proof of Registered office like Sale Deed/Lease Deed/Rent Agreement etc;

6) Latest Utility Bill of Registered office like Electricity Bill / Gas Bill/ Telephone Bill;

7) NOC of owner if registered office is taken on rent/lease;

8) Proof of Identity (Voter ID/Driving License/Passport/Aadhar Card) and Residence (Bank Statement/Electricity Bill/Telephone bill not older than 2 months) of subscribers/Directors not having DIN;

9) Copy of Specimen Signature for EPFO and ESIC

10) Declaration of Authorised signatory for Opening of Bank Account

D. Key Benefits of Section 8 Company:

• Exemption from some provisions of the Companies Act.
• Tax benefits for both the company and donors under Sections 80G and 12AA of the Income Tax Act.
• No minimum capital requirement.
• A Section 8 Company has more credibility as compared to any other Non-profit organization structure like Trust or Society.