What Are the Steps to Register a Section 8 Company?

People from a variety of backgrounds are motivated to make a difference in the world and society through philanthropy. As a result of facing challenges themselves, they have gained an understanding of people’s life challenges and feelings of trouble and distress. Several NGOs have mushroomed across India as a result. Hence, our country, India, provides the option of registering an NGO as a trust or society, either through a trust deed or as a private limited company. In this article, we discuss essential information related to registering a company under section 8.

The Section 8 Company – What Does it do?

An Indian company must obtain a license from the central government, for which it must have the objective intent of promoting commerce, art, science, sports, education, research, social welfare, charity, religion, environmental protection, or any other activity. 

There have been a number of NGO organizations working tirelessly to help underprivileged women and children in India. They provide them with better opportunities for growth, and an environment where they can make a living. CRY(Child Rights and You) is one of the most renowned NGOs in India dedicated to protecting children’s rights. It covers over 19 states in India and works on key issues such as education, health, nutrition, and safety, which all contribute to the child’s right to live in a sense of security, and child participation, which ensures the child has the opportunity to participate in social activities and feel valued. As with other NGOs, they strive to improve society in various ways.

Countries like India offer exemptions and benefits to founders under section 8 of the company registration act to encourage these activities and encourage them to make a positive impact on society.

Why Do People Register Under Section 8?

While section 8 companies have a similar structure to trusts or societies, they have some additional privileges and exemptions. Those companies that have registered under section 8 have a better legal standing, as well as higher credibility among their donors, government agencies, and stakeholders.

Furthermore, the company or its founder can benefit from several tax deductions under Section 12AA and Section 80G of the Income Tax Act, receive an exemption from stamp duty, and receive approval within 45 working days. A company’s life span can also be indefinite, either until the individual dies or until its objective is achieved.

Requirements for Registration

Section 8 registration requires the following documents from the company:

• Copies of pan cards
• Passports, Aadhar cards, driving licenses, and voter identification cards are all acceptable forms of proof of identification.
• An individual’s address can be verified by a telephone bill, utility bill, or bank statement.
• An image the size of a passport
• Any utility bill from the latest period can serve as proof of the company’s address.
• Certificate of no objection
• A copy of the lease agreement, if the office is rented.

The above documents can be used to precede the registration of the company.

Obtaining Funding for a Section 8 Company

• To accept donations from foreign donors, the company must acquire FCRA registration. If there is a time urgency, a commissioner’s permission will suffice in the absence of a 3-year registration process.
• To raise funds, the company can issue new equity shares with a higher value.
• An organization’s primary source of funding is domestic donations.

Registration Steps

Section 8 Company registration can be completed online, but the applicant must undergo a series of steps and wait times for each of them as detailed below:

Step 1: To proceed with the registration process online, you will need to acquire DSC and DIN. To register a section 8 company, the first step is to obtain the DSCs for all shareholders and directors. The organization should also carry out the process of obtaining name approval. This step should be skipped by some companies that have already acquired DSCs for their directors and shareholders.

As well as choosing a name for the company or reserving a name, it is also crucial to clearly state its objectives. A name is reserved after analyzing the available names by utilizing the RUN form.

Step 2: Filling out the INC 12 form is the next step in preparing the license documents. In the registration process, this step requires the most time. As part of the document preparation process, the forms such as spice +, spice moA, spice aoA, INC 22 are filled out, which include information related to address, education qualifications, paid-up capital, registered office, shareholding pattern, and all the information regarding the company. After they have all been completed, MCA’s central processing center sends them for further processing.

Step 3: Certificate of incorporation acquisition:

An individual must obtain a certificate of incorporation from the registrar of companies within 25 days of submitting the documents. Once the registrar has waited for any objections, the license will be issued. In a way, this certification serves as your company’s birth certificate, and this ends its registration. Please make sure to cross-check the details, as it must have included the name of the company and the registered address of your company, as well as its 21-digit alphanumeric identity number (CIN) approved by the MCA.

Step 4: After opening an account, the individual must apply for a PAN and TAN and receive them within seven days. By submitting the MoA, AoA, PAN, TAN, and incorporation certificate after acquiring the PAN and TAN, the company is able to open a bank account.

Upon commencing operations, the company is expected to deposit the capital amount into its bank account.

It is easier for registered Section 8 companies to gain recognition across the nation and become more trustworthy because they have acquired a license and thereby provide more benefits for their owners.