A company registered under companies act 2013 or previous applicable act and has in objects to,
– Sports Promote commerce, art, science, education, research, social welfare, religion, charity, protection of environment or any such other object;
And intends to apply its profits, if any, or other income in promoting its objective, intends to prohibit the payment of any dividend to its members is called section 8 companies under companies act 2013.
The license may be issued by central government such manner as may be prescribed, and on such conditions as it deems fit, approve that association of persons or person to be registered as a company under this section without the addition to its name of the word “Private Limited”, or as the case may be, the words “Limited”, and On application, in the prescribed form, Registrar may register such person or association of persons as a company under this section.
Section 8 Company is also a company that is registered for charitable or non-profit purposes. However, this Company is similar to a Trust or Society; an exception is that a Section 8 Company is registered under the “Ministry of Corporate Affairs (MCA)” of the Central Government while the Societies and Trusts are registered under the regulations of the State Government. However, this has numerous advantages as compared to Trust or Society and also has better credibility among donors, departments of government, and other stakeholders. Further, the key feature of this Company is that it is possible to incorporate the company name without using the word “Limited” or “Private Limited” as the case may be.
This type of company incorporated for charity, social welfare, social promotion, their main aim is to promote social welfare and work for society, not to earn profits. Their main objects depict the reasons for their incorporation, objects are like Sports, Promote commerce, art, science, education, research, social welfare, religion, charity, protection of the environment, or any such other object.
As compared to other companies, section 8 companies don’t require any prescribed minimum paid-up share capital.
These types of companies are licensed by the central government under section 8 of the companies act 2013 and these companies work for society and receive a donation from other general public for the welfare work.
Section 8 company also forms as a private limited or public limited company having limited liability. Members of this company have limited liability as per their share subscribed.
This form of company’s doesn’t issue a dividend to its members, because it is restricted from the law. They cannot distribute their earned profit as dividends to its member; they can use their profit in promoting their business objectives.
An entity means something that has a true existence; an object with a distinct existence. A company is a legal entity and a legal entity established under the Law. Hence a company is a form of the organization having broad legal potential and that may own property and also incur debts in its own name. The members of the company have no liability towards company debts because the company and members both are the separate people in the eye of the law, hence the company is an artificial person having a separate legal identity.
Limited Liability means the status of being legally responsible for a company’s debts only to a limited sum. Like proprietorships and partnerships, the Member’s responsibility for the company’s debts is limited in a limited liability company. In other words, the responsibility of a company’s members is limited only to the sum of the face value of the shares they take over
As per the point of view of incorporation, there is no minimum capital required for incorporating a private limited company. As per company law 2013, you can start a private limited company with 0 paid-up capital
While incorporating section 8 companies there is minimum stamp duty liveable. The government give privileges to section 8 on the incorporation of the company, hence it charges less stamp duty on incorporation.
Section 8 companies may not use suffixes like the private limited company or limited company, it is optional for them.
Section 8 company can get the benefit, if it gets registration under section 80G and 12AA of IT act.
STEP 1: APPLY FOR THE DESIRED NAME
The first step in incorporating a company is for reserving the name of the proposed company in part-A of SPICe Plus (SPICe+) form. In this form choose your business activity and file for two proposed names, if CRC will reject the proposed name then file again with two new names within a certain time limit from the date of rejection (15 days).
STEP 2: APPLY FOR A DIGITAL SIGNATURE CERTIFICATE (DSC)
The process of incorporation of a Company is 100 percent online in India. Hence, we need to apply for a DSC (Digital Signature Certificate), which will be used for electronically signing the forms by proposed directors and proposed members respectively. DSC has to be mandatorily applied for each and every single member/shareholder and director of the Company.
STEP 3: FILL THE APPLICATION FOR INCORPORATION (SPICe plus Form – SPICe+)
Once, your name gets reserved under it will be valid for 20 days from the date of approval, within 20 days you have to fill-up the respective application form for incorporation along with all the requisite attachments and documents and upload it online. SPICe+ is an advanced form combination of 8 forms in one. Through this proposed company can apply for at once:
Next step is to fill the part-B of SPICe + which will contain all the detail related to incorporating company like number total number of directors and members, Authorized share capital, paid-up capital, number of share hold by members, company registered address detail, directors and member detail and will required attachments for proof. Then draft the MOA (memorandum of association) and AOA (Article of Association) of the proposed company, then fill form required for EPFO and ESIC registration with detail, then Fill the AGILE form for procuring GSTIN. After filling all these attach the signature and then upload it on the MCA website.
For section 8 company applicants need to attach additional documents with SPICe+ form in part –B
STEP 4: CERTIFICATE OF COMMENCEMENT OF BUSINESS
Once the application of incorporation of the company is approved and the Certificate of Incorporation is issued by the ROC, the Company shall file for seeking approval for commencing the business within 180 from the date of incorporation of the Company
1. Documents required for Incorporating Private Limited Company is as follow:
2. ID proof of proposed Directors and members (anyone):
3. Address proof of proposed members and directors (anyone):
4. Address proof for the principal place of business of the proposed company (anyone)