Section 8 Company
What is Section 8 Company?
Many companies primarily have charitable and non-profit objectives. Such entities are referred to as a Section 8 Company. Section 8 company are those companies whose objectives is to promote fields of arts, commerce, science, research, education, sports, charity, social welfare, religion, environment protection, or other similar objectives. These companies also apply their profits towards the furtherance of their cause and do not pay any dividend to their members.
Types of Section 8 Company
1. Trust Registration--A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.2. Society Registration-A society is the aggregate of people living together in a more or less ordered community. It is an organization or club formed for a particular purpose or activity.
3. Section 8 Company-Companies that are formed for some charitable and non-profitable objectives.
Advantages of Section 8 Company
• 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.
Procedure for the Incorporation of Private Limited Company
1) The first step is to obtain a Digital Signature Certificate (DSC) by all the Directors. Documents required to obtain DSC are:
- PAN Card of the Director
- Aadhar card of the Director
- Photo
- Email ID
- Contact Number
2) After obtaining DSC, the next step is to obtain the Director Identification Number (DIN) by filing form DIR-3 along with a self-attested identity proof, address proof and a photo. (If directors are more than three as DIN for up to three directors can be obtained through Spice+ Inc-32).
3) File form Spice+ Part Afor reservation of name. Two names can be proposed in application. CRC on being satisfied may reserve the name for a period of 20 days from the date of approval.
4) The next step is to file application for certificate of Incorporation through Spice+ Part B for incorporation of company along with e-MOA and e-AOA.
5) Spice+ also gives facility to obtain EPFO, ESI and GSTIN registration of the proposed company.
6) After satisfying with all the details provided in application for certificate for incorporation, registrar of companies shall issue Certificate of Incorporation (COI) of the company and allot CIN Number (Corporate Identity Number).
Documents required for Incorporation of Private Limited Company
1) Passport size photograph of all directors
2) Self-attested copy of PAN of all directors
3) Self-Attested Address proof of all directors (Any One of Voter ID, Passport, Driving License, Aadhar Card)
4) Proof of office address (Any One of Electricity Bill, Telephone Bill, Property, Gas Bill, Tax Bill).
5) If Rented Business (Rent Agreement Copy) or if own (sell deed)
6) Company Name (1 to 6 Names)
7) Company object or product Name