Overview of Section 8 Company registration

Section 8 Company registration involves a non-profit organization that is incorporated to promote certain activities such as education, sports, science, religion, research, social welfare, cultural activities, and other goals with similar objectives. The revenue generated from this company is utilized to promote instead of distributing it amongst the company's members like a private or public limited company or any other type of business. For incorporating a company under Section 8 of the Companies Act 2013, there is a requirement of a minimum of two directors in the case of private limited companies and three directors in the case of public limited companies. No minimum paid-up or authorized capital is required for a Section 8 Company registration. This write-up will focus on the key objectives and benefits of a Section 8 company and the process for registering a Section 8 company.

What are the requirements of Section 8 Company registration?

There are several requirements for setting up a Section 8 company, as follows:

1. Minimum number of directors - There should be a minimum number of two directors for setting up a section 8 company, in case the company is to be set up as a private or public limited company. For a private limited company, the maximum number of members should be 200; for a public limited company, the maximum number of members is unlimited.


2. Paid-up capital - In a Section 8 Company, there is no threshold for paid-up capital, and the company also should not use words like “limited” or “private limited” along with the company name.


3. MOA and AOA - The MOA and AOA of the Section 8 company should clearly state the purpose of the company. In a section 8 company, the profit earned cannot be distributed among the company members. Therefore, any profit generated from the company transactions must be utilized towards its objective or development.


4. Management of the company - In a section 8 company, the company's management is handled by the company's director and not by any trustee or other member.


5. Digital signature certificate (DSC) - The proposed director must digitally sign all the forms for Section 8 Company registration. Therefore, there is a need to obtain the DSC, which is granted by the government certifying agencies. The digital signature certificate required for the section 8 company is of the class 3 category.


6. Director Identification Number (DIN) - The proposed directors have to apply for the DIN allotment in form DIR3 along with some documents such as Identity verification, PAN, and Address proof in the MCA portal, which must be attested by a professional such as a CA, CS, or Cost Accountant.

Regulations of Section 8 Company registration

Section 8 company is regulated according to the Companies Act, 2013; therefore, such a company must maintain accounts and file returns according to the Companies Act to the Registrar of Companies. The m o a and a o a of a Section 8 company cannot be without the permission of the Central Government, and the tax and GST provisions must be followed.

What are the advantages of Section 8 Company

There are several benefits that a Section 8 company enjoys from registering as an NGO, as follows:

• Minimum Capital Requirement - There is no such minimum paid up capital for Section 8 Company registration. Further, the capital structure can be as per the needs and requirements of the company.


• Stamp duty for setting up a Section 8 company - No stamp duty is required to be paid, which is generally imposed on the MOA and AOA in case of a public or private limited company.


• Tax benefit of a Section 8 company - - There are several tax benefits under the Income Tax Act 1961 section. Therefore, the company auditor's report order does not apply to the Section 8 company. The donors of the Section 8 company are also given a tax exemption, and therefore, the donations received by the company become tax-free as per the section 12A and 80g of the Income Tax Act 1961.


• Separation of legal identity - Through Section 8 Company registration, a distinct legal identity is obtained for the company's members, which enjoys perpetual existence; therefore, the company operations are not affected by the exit of any member.


• Limited liability - Like a private limited company or a public limited company, a Section 8 company also has limited liability as per their share; therefore, the members of the Section 8 company are liable only for the percentage of claims to which they have subscribed. And they will not be held personally responsible for any of the losses faced by the company.


• Authenticity - Section 8 companies are regarded as more authentic than any other charitable organization because it is regulated under the Companies Act GST, and Tax laws also become applicable to Section 8 companies.

Eligibility of Section 8 Registration

For setting up a Section 8 company, it is necessary to look through the eligibility criteria required for a Section 8 company registration.

1. Section 8 Company registration application can be made by any individual or HUF.


2. The directors elected under the Section 8 company should fulfill the requirements and compliances according to Section 8 of the Companies Act, and at least one director should be a resident of India.


3. The objective of the Section 8 company should be clear and involve purposes such as education, sports, science, religion, research, social welfare, cultural activities, and other similar goals.


4. The profit generated from the company should be distributed equally amongst its members, which would be further utilized towards the company's objectives or in the development of the company.


5. The company's members are prohibited from taking remuneration in cash or kind.

Documents required for Section 8 Company Registration

Several documents need to be present for the Section 8 Company registration, and the documents are stated as follows:

1. The Memorandum of Association (MOA) and Article of Association (AOA).


2. Declaration by the subscribers and the directors


3. Digital signature certificate


4. Proof of address.


5. Resolution by the promoter company


6. Identity and address proof of all the members


7. Form INC3 for the consent of Nominee

Process of Section 8 Company Registration

The procedure for incorporating a Section 8 company as per the Companies Act 2013 is as follows:

• Digital Signature Certificate (DSC) - The first step is to obtain a digital signature certificate of the directors proposed for the Section 8 company registration. The digital signature certificate is essential in the Ministry of Corporate Affairs (MCA) case. For obtaining a DIN form, DIR3 should be used along with the Digital Signature Certificate of the directors.


• Director Identification Number (DIN) - Now that the digital signature certificate has been obtained, we will get the Director Identification Number. The Director Identification Number is a unique number that the MCA issues to those aspiring to become company directors in India.


• Company Name - A company name should be selected for the Section 8 company, which should be distinct and not infringe upon any other companies' rights. To reserve the company name with the MCA form, INC 1 should be used.


• Incorporation application - In the next step, we must apply for the Section 8 company in form Inc 32 along with the Memorandum of Article and Memorandum of Association.


• INC12 - In the next step, we must apply for the Section 8 company in form Inc 32 along with the Memorandum of Article and Memorandum of Association.

An incorporation certificate will be issued after all the procedures have been followed and there has been no discrepancy in the application. The MCA gives the certificate of incorporation in form INC16. It serves as proof of the Section 8 Company registration with the MCA.

Why Adviso?

Section 8 Company Registration involves requirements, document preparation, and pre and post-compliance obligations. It is essential to comply with the specific terms set by the Companies Act 2013. The incorporation of a Section 8 Company Registration can be a tedious process without professional support. That’s where Adviso comes in.

At Adviso, we provide expert services for online company registration on the MCA website. Our Lawyers, CA, and CS experts will guide you through every step of the journey to ensure your company lists smoothly and efficiently.

With Adviso's expertise and assistance, you can easily navigate the complexities of Section 8 Company registration, saving time and ensuring compliance with all necessary regulations.