SECTION 8 RELATED COMPANY
A Society is an organization which is registered as a Non-Profit Organization (NPO). NPO/company has its objective of promotion of arts, commerce, charity, education, protection of environment, science, social welfare, sports, research, religion and intends to apply its profits, if any, or other income in promoting its objects. It functions exactly like a limited company including all the rights and obligations that come with such a company. However, it differs from a company in one very crucial aspect, i.e. it cannot use the words “Section 8” or “Limited” in its name.
The income of the Company must be used to promote only charitable objects and cannot pay any dividend to the members of the company. The central government provides an incorporation certificate to all such companies and also informs them about some restrictions and conditions. In case they don’t fulfil them, the central government may also order them to wind up the company. In case fraud objectives of the Company are proved, legal action will be taken against all officers of the Company.
DOCUMENTS REQUIRED FOR SHOP/CLUB/TRUST/NGO REGISTRATION
Digital Signature Certificate (if you already have it)
Director Identification Number (if you already have it)
Memorandum of Association
Articles of Association
ID proof for members(Aadhar Card,Passport,Voter ID)
Passport size Photographs
Director’s details (if Members are other Companies/LLPs)
ADVANTAGE OF SOCIETY/CLUB/TRUST/NGO
- No Minimum Share Capital Requirement
- Easy Transfer of Ownership
- Tax Benefits
- No need to use “Section 8” or “Limited” title
- No Stamp Duty
- Clear Objectives for easy donations and loans
- Easy to Manage
- Exemptions and Privileges under Companies Act, 2013
- Relaxation in Compliances
Profit or income of the Section 8 Company cannot be used for any object other than those mentioned in its MOA
Distribution of profits or declaration of dividend to its members is prohibited.
No member can be appointed as an office of the company with any remuneration.
Its income is taxed at the same rates as other companies
A Section 8 Company cannot alter the provisions of its MOA and AOA except with the previous approval of the Central Government.
STEPS FOR INCORPORATION OF SOCIETY/CLUB/TRUST/NGO
Step 1. Application of DSC & DPIN
First of all, the partners have to apply for Digital signature and DPIN. Digital signature is an online signature used of filing and DPIN refer to Directors PIN number issued by MCA. If the directors already have DSC and DPIN, then this step can be skipped.
Step 2. Name approval
You need to provide 3 different options for your company name to MCA of which one will be selected. Names provided should ideally be unique and suggestive of company business
Step 3. Approval of other Authorities
The Registrar of Companies may require the applicant to furnish the approval or concurrence of any department,regulatory body, appropriate authority, or Ministry of the Central or State Government(s) in relation to the work to be done.
Step 4. Obtaining Section 8 Company Licence
After the company’s name is approved, one needs to apply for a Section 8 Company licence from the MCA.The Registrar will wait for 30 days for objections, if any, of any person pursuant to notice published in newspapers.The Registrar might also consult any other regulatory bodiesandnecessary authorities. Thereafter, the Registrar of Companies may,at its discretion, grant the licence with or without certain conditions. The Registrar may direct the company to insert in its memorandum, or in its articles, or partly in one and partly in the other, such licencing conditions as may be specified by the Registrar in this behalf.
Step 5. MOA & AOA submission
Once the licence is obtained, one needs to draft Memorandum of association and Articles of Associate. But the object of the company must always be a charitable object. Both MOA and AOA are filed with the MCA with the subscription statement.
Step 6. Get Section 8 Company incorporation certificate
It typically takes 15- 25 days to form a Section 8 company and get the incorporation certificate. The Certificate of Incorporation is proof that a company exists. It also includes your CIN (Company Incorporation Number).The Registrar will wait for 30 days for objections, if any, of any person pursuant to notice published in newspapers.The Registrar might also consult any other regulatory bodies and necessary authorities. Thereafter, the Registrar of Companies at its discretion, may grant the licence. And such licence may contain conditions as deemed necessary by the Registrar.
Step 7. Apply for PAN, TAN and Bank account
Then you need to apply for PAN and TAN. PAN and TAN are received in 7 working days. Post this, you can submit the Incorporation certificate, MOA, AOA and PAN with bank to open your bank account.
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