Section 8 Companies (Section 25 of Companies Act 1956) , can be registered under Companies Act 2013 having a charitable purpose with limited liability but without the addition of the word ‘Limited’ or ‘Private Limited’ to its name.
In India, there are basically following three forms of Non Profit organisations(NGO) registered under various Acts-
SECTION 8 COMPANIES
a) has objects like promotion of commerce, arts, science , education, research, social welfare, religion, charity, protection of environment or any such other object.
b) apply its profit or other incomes in promoting its objects.
c) prohibition on the payment of dividends to its members.
may make an application to grant registration under Section 8 of the Act.
Any alteration in any provision of Memorandum of Association or Articles of Association of Section 8 company can only be done with the prior approval of Central Government.
1. An application shall be made to Registrar of Companies in Spice+(Simplified Proforma for Incorporating Company Electronically- INC-32) along with such fees as prescribed under rules.
2. The said application shall be accompanied by following documents-
ISSUANCE OF LICENSE- The Central Government may by licence allow the person or association of person to register as Section 8 company and thereupon, Registrar shall register the company , if the application is complete in all form and impose such conditions as think fit,
1. Special resolution- A company registered under section 8 with intend to convert itself into a company of any other kind shall pass a special resolution at a general meeting for approving such Conversion
2. Explanatory Note- The explanatory statement annexed the notice convening the extraordinary general meeting shall set out the following reasons for such conversion
A) The date of incorporation of the company,
B) The principal object of the company as set out in the memorandum of association,
C) The reasons as to why the activities for achieving the objects of the company cannot be carried out as Section 8 company,
D) The principal or main objects of the company are proposed to be altered , what would be the ultimate object and the reason for the alteration
E) The privileges or confessions currently enjoyed by the company such as tax Exemptions , approval for receiving donations or contributions , land and other immovable property if any acquired by the company at concessional rates,
F) Details of impact of the proposed conversion on the members of the company including details of any benefits that may accrue to the member as a result of the conversion.
3. Filing of Form No. MGT-14 with Registrar of Companies– A certified true copy of the special resolution along with a copy of notice and explanatory statement shall be filed with the registrar in form No.- MGT 14 with in 30 days of passing such resolution.
4. Filing of Form No. INC.18 with Regional Director– The company shall file an application in with the Regional Director in Form No. INC.18 along with such fees as may be prescribed.
The application shall be accompanied by :-
5. Copy of application to Registrar of Companies- A copy of the application filed with the Regional director shall also be filed with the concerned Registrar of Companies.
REVOCATION OF LICENCE
1) The Central Government is empowered to pass an order for revocation of license granted to a company registered under this section if it contravenes any of the requirements of this section or any of the conditions subject to which a license is issued or the affairs of the company are conducted fraudulently or in a manner violative of the objects of the company and prejudicial to public interest.
2) No such order can be passed unless the company is given a reasonable opportunity of being heard.
3) A copy of every such orders should be given to registrar of companies.
4) The Central Government is empowered to pass an order either to wound up the company under this act or amalgamated with another company registered under this section.
CONSEQUENCES OF NON COMPLIANCE
If the company makes any default in complying any of the provisions of this section then the :-
Company – shall be liable for the fine not less than 10,00,00 rupees extending up to 1,00,00,000 rupees .
Directors and every Officer in default – shall be punishable with imprisonment for a term up to 3 years or with fine Not less than 25,000 rupees but which may extend to 25,00,000 rupees or with both
If it is proved that the affairs of the company were conducted fraudulently then every officer in default shall be liable for action against section 447.
CERTIFICATION AND REGISTRATIONS
1) 80G CERTIFICATE FROM INCOME TAX– 80 G certificate is issued to section 8 company by the income tax department. It gives the donor of section 8 company an exemption for his donation under the income tax.
2) 12A REGISTRATION- 12A is a one time for registration which exempts the Section 8 company to pay income tax on the income earned by such company.
3) FCRA REGISTRATION- FCRA registration is required for those Section 8 companies which are desirous of receiving foreign contribution for the objects specified in the memorandum of association.
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