Section-8 Company is a non-profit organisation with benevolent objectives such as the development of the arts, business, science, education, sports, environmental protection, religion, charity, and so on. The Companies Act, 2013 does not prohibit it from making profits, but it does prohibit profit distribution among its members.
The earnings earned by such a corporation must be used solely to promote company's goals. Central government register such company as a company with limited liability without the addition of the words "Limited" or "Private Limited" to its name.
A Section 8 company comprises of the following distinct features that most other kinds of companies do not have:
Charitable objectives: Section 8 companies do not aim to make profits. Their objectives are purely charitable in nature.
They aim to further causes like science, culture, research, sports, religion, etc.
No minimum share capital: Section 8 companies, unlike all other companies, do not require a prescribed minimum paid-up share capital.
Limited liability: Members of these companies can only have limited liability. Their liabilities cannot be unlimited in any case.
Government license: Such companies can function only if they have the Central Government's license. The Government can revoke this license as well.
Privileges: Since these companies possess charitable objectives, the Companies Act has accorded several benefits and exemptions to them.
Firms as members: Apart from individuals and associations of persons, Section 8 also allows firms to be members of these companies.
1. Application for name availability in form RUN
A request for name availability must be sent through the "RUN" facility. The phrases Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust, and the like shall be included in the name of Section 8 Company. In the RUN facility, you can submit up to two names at a time and make one resubmission. The RUN fee is Rs. 1000/-. Once authorised, the name is valid for 20 days.
2. Getting Digital Signatures of First Directors
The next stage is to obtain the first subscribers' and directors' class 3 digital signatures, which are essential for filing the incorporation form with the ROC.
3. Preparation of Memorandum of Association, Articles of Association and other documents
The company's charter, or MOA, outlines the scope of its operations. An AOA is a document that governs the company's internal management. The MOA for a Section 8 company must be in form INC-13, while the AOA for a Section 8 company has no set format for which Table F provisions can be adopted. Each subscriber must sign the company's MOA and AOA and include his or her name, address, description, and occupation in the presence of at least one witness who will attest the signature and sign and add his or her name, address, description, and occupation.
4. Filing of SPICe 32 Form
After getting proposed name approval, one may go ahead with filing of form SPICe 32.
Attachments of SPICe 32:
The following are the documents which are required to be attached with the SPICe form for incorporation of Section 8 Company.
If the ROC is satisfied with the submitted forms, the ROC is issued a Certificate of incorporation.
No, an OPC cannot be incorporated as a Section-8 Company.
A Section 8 Company shall not pay any dividend to its members, but shall apply the surplus for the promotion of its objects only.
Section-8 Company can be incorporated with minimum of 2 members acting as subscriber to MOA & AOA.
Section 8 entities must conduct AGMs in accordance with stipulated rules, according to the Company Act 2013.
The auditor is appointed in the purview of Section 139 of the Companies Act. Every first auditor of Section 8 entity is to be appointed within thirty days from the incorporation date. The auditor can be a person or a company. The auditors also dig down the financial filings of the company.
Yes, there is no exemption furnished towards section 8 companies.
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