Incorporation of Section 8 Company (With Charitable Objects)

Introduction:-

According to section 8(1) of Companies Act, 2013,

Where it is proved to the satisfaction of the Central Government that 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, the Central Government may, by license 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.

Essentials for Incorporation of Section 8 Company: –

Name of the proposed Company: –

The Central government can give license to such companies although it does not contain “Private Limited” or “Limited” in its name.

> The name of the proposed Company shall end with word “Foundation”.

> The proposed name should be as per rule 8 of The Companies (Incorporation) Rules, 2014, which can also be seen through the following link:- https://taxguru.in/company-law/companies-incorporation-fifth-amendment-rules-2019.html

> The proposed name should not be identical or resembling to any existing company.

> The proposed name should not be identical to an existing trademark.

Business of the proposed company:-

> The business to be conducted by the proposed company shall be determined.

> The proposed business can only for the purpose mentioned in section 8(1) of the Act.

> The code of business activity of proposed company shall be determined.

> The code can be determined from Page 25 to 27 of http://www.mca.gov.in/Ministry/pdf/SPICe+_help.pdf

Registered office of the proposed company:-

> The registered office of such company must be determined,

> The registrar of companies is decided based on such registered office.

> In case the office is on lease or rent, then lease/ rent agreement shall be required.

Memorandum of Association:-

> There should be a draft MOA of the proposed company in form INC-13 which should be attached with the form SPICe+.

> Such MOA shall include the following:-

• • Name of the proposed company
  • State in which registered office is proposed to be situated
  • Charitable objects of the company
  • Objects of the company extends to whole of India
  • Manner of alteration of MOA
  • Liability of members
  • The initial Capital of the company.
  • Maintenance of certain books and records
  • Manner of winding up of the company
  • Amalgamation of company with a company having similar objective
  • Details of subscribers of MOA with their signature.

Articles of Association:-

> There should be a draft AOA of the proposed company as per applicable table of Schedule I of the Act, which should be attached with the form SPICe+.

> Such AOA shall include the following:-

• • Regulations for management of the company
  • Rights and liabilities of directors
  • Limitations and restrictions of directors
  • Rights and liabilities of members
  • Manner of conducting business
  • Any other point as may be applicable

Directors and Promoters:-

> The first directors and promoters of the proposed shall be decided.

> There should be minimum 2 directors and 2 members if you proposed to registered as private limited or 3 directors and 7 members if you proposed to registered as limited.

> Such person(s) shall not be restricted by law for becoming director or promoter or member.

> Details of such person(s) should be available along with required documents which are described below in details.

> DIN and DSC of such person(s), if available.

Procedure of Incorporation of Company with Charitable Objective by SPICe+:-

Step 1:- Fill Part A of web form SPICe+

1. Log in into MCA portal mca.gov.in

2. Select MCA services and choose SPICe+

3. Choose New Application. In case the name is already approved through Part A, Choose Existing Application.

4. Choose Type of Company – Section 8 Company

5. Choose Class of Company – Private/ Public

6. Choose Category of Company – Company limited by shares/ Company limited by guarantee

7. Choose Sub-category of Company – State government company/ Union government company/ Non-government company/ Subsidiary of a foreign company/ Guarantee and association company

Note: – Guarantee and association company can only be choose if the applicant had selected Company limited by guarantee.

8. Enter the code of Main division of industrial activity of the Company as per Annexure B of help provided for filling SPICe+.

9. Description shall be auto-filled based on the Industrial activity code selected.

10. Proposed name of the company. There are two option to mention proposed names based on priority.

11. Attach the relevant document supporting the proposed name.

Note: – There is only one attachment allowed. In case of multiple attachments, it should be attached as single attachment.

Note: – The size of attachment should be maximum 6MB. In case the full form SPICe+ is being submitted for name reservation as well as incorporation then the size of the form should not be more than 6MB.

12. Auto check, Save and Submit.

13. After selecting Submit a pop up will appear. The applicants have to choose if he wants to apply for name reservation only or should be continued for incorporation. In case the application is to be made for name reservation only then the applicant has to submit the Part A and pay fees of Rs. 1000.

14. After completion of Part A, Part B will be enabled.

Step 2:- Preparation of Documents:-

After the approval of name is received, the documents should be prepared which are required to be attached with Part-B of SPICe+ and AGILE-PRO, which are mentioned below and Apply for DSCs of person who does not have DSC.

Step 3:- Fill Part B of web form SPICe+

1. Select whether the articles are altered from Articles as per standard Articles prescribed in table of Schedule-I.

2. Enter capital structure of the proposed company including Authorised capital, type of share capital, Number of shares, nominal value of shares, total amount of share capital to be issued initially etc. (which can be changed from time to time as per requirement).

3. If there is no share capital, then the number of members of the proposed company shall be specified.

Note: – Proposed employees should not be included in number of members.

4. Enter the correspondence address of the proposed company. In case there is no registered office, the applicant shall mention valid Email ID for receiving correspondence from the registrar.

5. Select whether the correspondence address is address of registered office of the company.

6. When there is no registered office at the time of incorporation, then a registered office shall be established within 15 days of approval of application of incorporation. Such address shall be intimated to registrar within 30 days of incorporation in form INC-22.

7. Select the name of ROC based on the correspondence address.

8. Enter the number of promoters as well as first directors (Individual + Non-individuals).

Note: – Except Non-individual directors, the directors should be specified in two categories, (i) Directors having DIN (ii) Directors not having DIN.

9. There shall be minimum 2 directors and 2 members if you proposed to registered as private limited or 3 directors and 7 members if you proposed to registered as limited. Whereas it should be equal to total number of members excluding employees in case there is no share capital.

10. Enter the number of Non-individual first promoters. Based on this blocks for Particulars of non-individual first promoter(s) not having DIN would be generated.

11. Enter the number of promoters who are proposed to be a director. Based on the difference of total number of promoters and the number of non-individual promoters plus number of promoter cum directors, the blocks for Particulars of individual first promoter(s) (other than promoter cum director) having DIN & not having DIN shall be generated.

12. Enter total number of proposed directors. There should be minimum 2 directors in private limited or 3 directors in public limited. In case of directors not having DIN, the details must be entered properly as DIN will be issued based on such details. There should be maximum 3 directors who are not having DIN. Based on the difference of total number of directors and the number of individual first promoter(s) cum director(s), the blocks of Particulars of directors (other than first promoters) having DIN & not having DIN shall be generated.

13. Enter particulars of first Non-individual promoters:-

i. Select Category – Company/ Foreign Company/ Company incorporated outside India/ Body Corporate/ Others.

ii. Enter CIN/ FCRN/ Any other registration number. Details would be pre-filled based on such number.

iii. Enter details of person authorised for acting on behalf.

iv. Enter PAN of such person authorised which should also be verified.

v. Enter the amount and number of shares subscribed.

14. Enter particulars of first individual first promoters (other than promoters cum directors) Having DIN:-

i. Enter DIN and click pre-fill. The Name, Gender, DOB and Nationality will be pre-filled based on MCA records.

ii. Enter number and amount of shares subscribed.

15. Enter particulars of first individual first promoters (other than promoters cum directors) Not having DIN:-

i. Enter Personal, Educational and Occupational details.

ii. Select personal identification number – PAN or Passport number (Passport In case of other than Indian nationality). PAN shall be verified.

iii. Enter Designation – Director/ Managing director/ Whole time director/ Nominee Director.

iv. Enter Category – Promoter/ Professional/ Independent/ Nominee.

v. Enter Email ID of proposed director

vi. Enter Address of proposed director

vii. Select proof of Identity to be attached – Voter ID/ Passport/ Driving License (any one).

viii. Select proof of Residence to be attached – Bank statement/ Electricity Bill/ Telephone Bill/ Mobile Bill (any one).

ix. Enter number and amount of shares subscribed.

16. Enter particulars of first individual first promoters cum directors having DIN:-

i. Enter DIN and click pre-fill. The Name, Gender, DOB and Nationality will be pre-filled based on MCA records.

ii. Enter Designation – Director/ Managing director/ Whole time director/ Nominee Director.

iii. Enter Category – Promoter/ Professional/ Independent/ Nominee.

iv. Enter Email ID of proposed director

v. Enter number and amount of shares subscribed.

vi. Enter number of entities in which such person is having interest and shareholding in such entities. In case, CIN/ FCRN/ LLPIN is available, there is no requirement to enter details of such entities.

17. Enter particulars of first individual promoters cum directors not having DIN (DIN would be issued based on such details): –

i. Enter Personal, Educational and Occupational details.

ii. Select personal identification number – PAN or Passport number (Passport In case of other than Indian nationality). PAN shall be verified.

iii. Enter Designation – Director/ Managing director/ Whole time director/ Nominee Director.

iv. Enter Category – Promoter/ Professional/ Independent/ Nominee.

v. Enter Email ID of proposed director

vi. Enter Address of proposed director

vii. Select proof of Identity to be attached – Voter ID/ Passport/ Driving License (any one).

viii. Select proof of Residence to be attached – Bank statement/ Electricity Bill/ Telephone Bill/ Mobile Bill (any one).

ix. Enter number and amount of shares subscribed.

x. Enter details of entities in which director has interest and position and shareholding of such director in that entity.

18. Enter details of directors (other than first promoters) having DIN:-

i. Enter DIN and click pre-fill. The Name, Gender, DOB and Nationality will be pre-filled based on MCA records.

ii. Enter Designation – Director/ Managing director/ Whole time director/ Nominee Director.

iii. Enter Category – Promoter/ Professional/ Independent/ Nominee.

iv. Enter Email ID of proposed director

v. Enter number of entities in which such person is having interest and shareholding in such entities. In case, CIN/ FCRN/ LLPIN is available, there is no requirement to enter details of such entities.

19. Enter details of directors (other than first promoters) not having DIN:-

i. Enter Personal, Educational and Occupational details.

ii. Select personal identification number – PAN or Passport number (In case of other nationality). PAN shall be verified.

iii. Enter Designation – Director/ Managing director/ Whole time director/ Nominee Director.

iv. Enter Category – Promoter/ Professional/ Independent/ Nominee.

v. Enter Email ID of proposed director

vi. Enter Address of proposed director

vii. Select proof of Identity to be attached – Voter ID/ Passport/ Driving License (any one).

viii. Select proof of Residence to be attached – Bank statement/ Electricity Bill/ Telephone Bill/ Mobile Bill (any one).

ix. Enter number and amount of shares subscribed.

x. Enter details of entities in which director has interest and position and shareholding of such director in that entity.

20. The state or union territory for the purpose of stamp duty will be pre-filled on the basis of address of proposed company.

21. Select whether stamp duty is to be paid electronically or not. The stamp duty payable shall be auto generated based on stamp duty applicable as per state rules for eform, MOA and AOA.

22. Give details for applying for PAN and TAN. Search Area Code, AO Type, Range Code & AO No from https://www.tin-nsdl.com/services/pan/pan-aocode.htmland https://www.tin-nsdl.com/services/tan/tan-ao-code.html

23. Enter source of Income of the proposed company.

24. Enter business/ Profession code as per table given in below mentioned link: page no 16 & 17: http://www.mca.gov.in/Ministry/pdf/SPICe+_help.pdf

 Attachments to form SPICe+:-

1) MOA in form INC-13, which should be signed by all subscribers.

2) AOA as per applicable table of Schedule I, which should be signed by all subscribers.

3) Declaration of a professional (CS/CA/CMA/Advocate) in form INC-14, which should be signed by professional.

4) Declaration of each person making the application in form INC-15.

5) Proof of Office Address – Utility Bills not older than 2 months.

6) No Objection Certificate (NOC) if the premise is owned by any other person.

7) If any promoter is a Company or Company incorporated outside India, then attach Certificate of Incorporation of such Company and Resolution passed for becoming promoter.

8) If any promoter is a Company, then resolution passed to become promoter shall be attached.

9) Consent to act as director from all directors in for DIR-2, which should be signed by respective directors.

10) Specimen signature of all directors for ESIC and EPF.

11) List of all proposed directors and promoters, signed by all respective persons.

12) Statement of estimated income and expense for next 3 years, signed by all respective proposed directors.

13) Statement of work proposed, signed by all respective proposed directors.

14) Statement of grounds on which application is made signed by all respective proposed directors.

15) Proof of identity and residential address as mentioned above for promoters and directors not having DIN.

Step 4:- Fill form INC-35 (AGILE-PRO)

This form is filled for application to obtain GSTIN, EPFO, ESIC, Professional tax (only in case of Maharashtra) and Opening of Bank account.

1. Name shall be pre-filled based on data entered in SPICe+ Part A.

2. As application for GSTIN is not compulsory, if the applicant wants to apply, then click on YES.

3. State and District would be pre-filled in basis of address entered in Part B.

4. The Sector / Circle / Ward /Charge / Unit of state jurisdiction shall be selected which can also be referred from state website.

5. The Commissionerate Code, Division Code and Range Code for center jurisdiction shall be selected after referring from https://cbic-gst.gov.in/cbec-portal-ui/

6. Select whether the establishment is on lease or not. In case establishment is on lease, mention the time period (Dates) for which it is taken on lease.

7. Select Nature of possession of premises. In case of others, specify the nature of possession.

8. Select Proof of Principal place of business which would be attached with the form anyone of the followings:

i. Property Tax Receipt

ii. Municipal khata copy

iii. Electricity Bill of premises

iv. Rent/ Lease Agreement

v. Consent Letter

vi. Rent receipt with NOC, in case of No/ expired agreement

vii. Legal Ownership Document.

Note: – The size of attachments shall be as per prescribed in AGILE-PRO help issued by MCA.

9. Select whether the building/premises of Establishment is Hired/ Rented or Owned or Leased.

10. If the premises is hired or leased and there is change of name of premises or unit, then it should be mentioned.

11. Select whether GSTIN is to be opted for Composition. In case it is opted for Composition, then mention category of the registered person.

12. Select atleast one nature of business activity. One Primary business shall be selected.

13. Select nature of work/ business and sub-category of work. The nature of work should be mentioned exact.

14. Enter 4-digit HSN code of the goods supplied by the businessas provided on CBIC website (cbic.gov.in). Description would be pre-filled after entering HSN code.

15. Enter 4 digit SAC code of the services supplied by the businessas provided on CBIC website (cbic.gov.in). Description would be pre-filled after entering SAC code.

16. Enter details of director who is an authorised signatory for the purpose of obtain GSTIN, EPFO, ESIC, Professional tax (only in case of Maharashtra) and Opening of Bank account.

17. Enter PAN or DIN of such director. In case DIN is entered, then Name and PAN would be pre-filled as per MCA records. In case PAN is entered, all details must be filled.

18. Enter valid Indian Mobile number and Email Id of such director. An OTP would be sent on both. Enter both OTP and verify.

• Attach Photo of such director in JPG format and maximum size should be 100kb.
• Attach proof of appointment of authorised signatory:-

i. Letter of Authorization – 100kb

ii. Copy of Resolution passed by Board of director and Acceptance letter.

19. Enter details of one director then above mentioned director who is also mentioned in Part B.

• Attach Photo of such director in JPG format and maximum size should be 100kb.

20. Select the name of the Bank from drop down menu in which account is to be opened: –

Punjab National Bank / ICICI Bank / Kotak Mahindra Bank / Bank of Baroda / HDFC / SBI / Indian Bank / Union Bank of India / Allahabad Bank / Andhra Bank / Bank of India / Bank of Maharashtra / Canara Bank/ Central Bank of India / Corporation Bank / Indian Overseas Bank / Oriental Bank of Commerce / Syndicate Bank / United Bank of India / Punjab & Sind Bank / UCO Bank / HSBC Bank.

• Attach Proof of Identity of Authorized Signatory for opening Bank Account.
• Attach Proof of Address of Authorized Signatory for opening Bank Account.

21. Download the format of Specimen Signature for registration with Employee’s Provident Fund Organisation from http://www.mca.gov.in/Ministry/pdf/specimensignature_07042019.pdf, Fill the requisite information as applicable, scan it and attach the same with the form.

22. GST declaration shall be enabled only if application is being made for issuance of GSTIN. Profession Tax declaration shall be enabled only in case the company is proposed to be situated in the state of Maharashtra. ESIC/EPFO and Bank declarations shall be enabled in all cases.

Note: – Attach Specimen Signature of all proposed directors.

Step 5:- Pre-filled INC-9

The declaration of the promoters and first directors shall be auto-generated in form INC-9 on the basis of details entered in Part-B.

Step 6:- Download the Forms and Affix DSCs

1. Download the following forms:-

a) INC-32 (SPICe+)

b) AGILE-PRO

c) INC-9 (Declaration of promoters and first directors)

2. Attach the documents to the respective forms.

3. Affix DSCs of proposed directors and professional on all required forms.

Note: – DSC to be affixed on Part-B and AGILE-PRO shall be of same person.

Step 7:- Upload the form and make payment of fees

After affixing the DSCs, Upload the SPICe+ form after linking form AGILE-PRO and INC-9 with the form on the MCA portal and make payment of fees as per prescribed.

The applicant may receive Certificate of Incorporation in form INC-11, if there is no query on part of the registrar and the company would receive a license from central government to conduct business a company with charitable objective.

Along with the Certificate of Incorporation, The PAN and TAN would be allotted to the Company. The Details of Bank Account, ESIC and EPF would be sent to the Company.

(Authors are associated with Ahemdabad based CS firm GOVIL RATHI & ASSOCIATES)