Section 8 of the Indian Companies Act 2013 permits to register companies with charitable motive with objective of promotion of commerce, art, science, social welfare, sports, research, religion, charity, education, protection of environment or any similar objective and they are not permitted to make any profit.
A Section 8 Company can carry on commercial activities and the surplus derived from such activities shall apply for promotion of its objects. They are not permitted to distribute its surplus to its shareholders in the form of dividend. Such companies are not required to keep the words Limited or Private Limited as part of its name.
Section 8 Companies can be registered as private or public company depending the number of its shareholders .
Incorporation of a Section 8 company in India for Charitable purposes
1. Form of company incorporation
We can have two forms of Section 8 companies in India
There should be at least three (3) directors and maximum is Fifteen (15 )
There should be at least two (2) directors and maximum is Fifteen (15)
2.Formalities in incorporation
Incorporation is doing at the Central Processing Centre of Ministry of Corporate affairs at Gurgaon and will be under the jurisdiction of Registrar of Companies of the State where the registered office is situated.
Incorporation is comprised of following steps
A. Name Application and Approval
For obtaining the desired name for the company to incorporate, we have to apply to the ROC in specified form Spice+ and the processing may take 1 to 3 days and cost involved is Rs. 1000/- subject to the availability of name.
B. Obtain Digital signature
Since all the filing to the Registrar of companies is through on line, all the promoters should obtain a Class 3 Digital signature
C. Application for Central Government for issuing Licence under Section 8 for registering a company for charitable purpose
Next step involved is preparation and submission of application in eform INC 12 for obtaining the licence under Section 8 for registering a company for charitable purpose
The application form should be with
D. Submission of Composite Incorporation documents for obtaining Certificate of incorporation and DIN
Next step involved is preparation and submission of incorporation documents like memorandum of association and articles of association online portal of the Ministry of Corporate affairs
The following documents are required for online submission
For Director/shareholder/Director cum shareholder
For Registered office Address
If foreign national is subscriber for company, all the incorporation documents signed by him need to be attested by Public Notary and to be apostilled as per the Hague convention
The new directors will get DIN Number and Certificate of incorporation will be issued in 1 to 3 days. At the Completion of registration of the company, the Ministry will issue the Incorporation certificate along with PAN Card and Tan Number
Thus for incorporation of a company, it may take 4 to 7 days from the date of submission of proper documents for DIN Number . For obtaining the licence it may take 2-4 weeks
E. Submission of AGILE Form for obtaining GST Registration ESI, EPF Professional Tax and Bank account opening
The Incorporation document comprise a mandatory online application form for applying for GST Registration ESI, EPF Professional Tax and Bank account opening.
GST registration is optional but other registrations are automatic. The applicant can select the Bank with whom they want to open their bank account in the Form Agile
3. Post Incorporation Compliances
After the Company is registered the Company is required to file INC form 20 A for commencement of business and to exercise borrowing powers. The subscribers has to deposit the subscription amount before filing the said form.
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