A Section 8 Company is a legal entity established to advance various fields such as business, art, science, sports, education, research, social welfare, religion, charity, and environmental protection. Unlike Trusts or Societies, a Section 8 Company must be registered with the Ministry of Corporate Affairs for purposes that are charitable or not-for-profit. It is overseen by the Registrar of Companies (ROC), in contrast to Societies and Trusts, which are governed by State Governments. This type of company is subject to more comprehensive regulatory oversight compared to the latter two options. In this article, we will provide a detailed overview of the necessary documents for the registration of a Section 8 Company.
Characteristics of Section 8 Company
A Section 8 Company in India is an entity established under the provisions of the Companies Act, 2013, designed for advancing activities that contribute to the betterment of society. Its incorporation aims to support endeavors related to the enhancement of art, science, education, philanthropy, religion, or any other advantageous pursuit that serves the community’s welfare. Noteworthy attributes of a Section 8 Company encompass:
- Objective of social welfare promotion: The main goal of a Section 8 Company is to advance social welfare rather than generating profits for its members.
- No dividend allocation: Any revenue generated by the company must be used to further its objectives, and no profits are distributed to the members.
- Profit utilization: Earnings accrued are reinvested into the company’s endeavors to fulfill its goals.
- Mandatory name indicator: Each Section 8 Company is required to include the term “Section 8” in its name.
- Restricted liability: Members’ accountability is confined to the amount they contribute to the company.
Documents Required for Directors (Indian Nationals)
The necessary documents for Indian nationals to establish a Section 8 company include:
- PAN Card: The PAN Card is a distinctive identification number granted by the Income Tax Department. During the incorporation procedure, Indian director(s) must furnish their PAN for verification.
- Address Verification: Directors need to provide proof of their address that corresponds with the name mentioned on their PAN Card. Suitable documents for address verification encompass Passport, Voter ID Card, Ration Card, Driver’s License, Electricity Bill, Phone Bill, and Aadhar Card.
- Residential Confirmation: Beyond mere address verification, company incorporation necessitates residential proof to authenticate the director’s address. Similar to the address proof, the residential proof should display the director’s name as it appears on the PAN Card. Valid documents include bank statements, electricity bills, telephone bills, and mobile bills.
Documents Required for Directors (Foreign Nationals)
Foreign individuals must provide certain documents when incorporating a company in India:
- Passport: This is a crucial requirement, and the passport must be properly notarized or apostilled in its country of issuance. If the passport is in a language other than English, an official translation is necessary.
- Address Verification: Similar to the passport, the address proof of the foreign national should also be notarized or apostilled. The submitted proof should include the Director’s name as stated in the passport. Examples of acceptable documents are a driver’s license, residency card, bank statement, or other government-issued documents that display the address.
NOTE:- In cases where the passport lacks the holder’s birth date, an additional document verifying the director’s date of birth must be provided. This additional document should be duly certified, attested, notarized, or apostilled.
Registered Office Proof
You need to provide one of the following documents as proof of your registered office during the registration process or within thirty days after the company is incorporated:
- A registered document that shows the title of the premises where the registered office is located, under the company’s name.
- A lease or rental agreement for the premises in the company’s name, which should be notarized. Additionally, you should include a copy of the receipt for rent payment, issued within the past month.
In addition to the above, you will also required to submit:
- Written authorization from the landlord.
- Documentation that proves the usage of utility services at the registered office.
Documents for Shareholders
Proof of identity and address for each shareholder is required to be provided on behalf of all individuals holding shares in the company. In cases where a shareholder represents a corporate entity or an Association of Persons (AOP), it is necessary to include the Certificate of Incorporation of the said corporate entity. Additionally, the resolution passed by the corporate entity authorizing its subscription to shares in the company being formed should also be attached.
Memorandum and Articles of Association
The heart of any incorporation lies in the Memorandum and Articles of Association, whether it’s for a private/public limited company or a Section 8 company. The former establishes the company’s fundamental principles and defines its permissible activities, while the latter governs the company’s internal operations. When it comes to Section 8 companies, the Memorandum of Association needs to be submitted using the INC 13 form, and there is no specific prescribed format for creating the Articles of Association.
These essential papers must be endorsed by each signatory to the memorandum, including their name, address, description, and occupation, with at least one witness present. These witnesses are required to verify the signatories’ signatures on these documents and provide their basic information within them.
Submit an application for a license to the Registrar using Form INC 12, along with a fee payment of Rs. 2000. The submission must include the subsequent documents:
- Provide the Memorandum of Association using Form INC 13.
- Include the Articles of Association.
- Prepare a Declaration in INC 14, which must be completed by a practicing CS/CA/CWA. This declaration should affirm that the draft MOA and AOA comply with the regulations of Section 8 and relevant rules. It should also state that all stipulations of the Act and its corresponding rules concerning the company’s registration under Section 9 and related matters have been fulfilled.
- Present a projection of the company’s income and expenses for the next three years.
- Attach the letter confirming the approval of the company’s name.
SPICE 32 Form
After the submission of the INC 12 form, the applicant must secure approval from the Central Government, which is done by filing SPICE 32. A recent notification mandates the submission of the eForm AGILE along with the former.
As a result, Section 8 Companies are established driven by charitable intentions, operating based on the principle of refraining from profit generation for their own benefit. Instead, their focus lies in aiding others to fulfill their essential needs. Due to many of these issues not being adequately tackled by government policies due to various factors, there exists a requirement and scope for entities that strive to address these concerns. This gave rise to the concept of nonprofit organizations.
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