REGISTRATION OF COMPANY NON – PROFIT UNDER SECTION 8 OF THE COMPANIES ACT, 2013
Company Not for profit purpose is governed by Section 8 of the Companies Act, 2013, which has main object of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object. The profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. It is registered purely for charitable or not-for-profit purposes. Prior approval of Central Government is also required for registration of Section 8 Company.
It is similar to a Trust or Society; expect that it is registered with the Central Government through Ministry of Corporate Affairs under section 8 of the Companies Act, 2013 and the rules made thereunder. Trusts and Societies are registered and regulated under State Government laws. A section 8 Company has various advantages when compared to Trust or Society like improved recognition and better legal standing. Section 8 company also has higher credibility amongst donors, Government departments and other stakeholders.
Section 8 Companies need not use the words “Limited” or “ Private Limited” after its name and this is what makes Non-Profit Company more suitable with its Charity or Non-Profit motives.
What will you receive in Company registration package ?
- DIN of 2 Directors
- DSC of 2 Directors
- Name Reservation
- MOA & AOA
- Incorporation Certificate
- Directors Appointment
- PAN & TAN
- GST Registration
- Post Incorporation compliances
- Filing of Declaration of Commencement of Business
Some of the advantages of Section 8 Company/ Non-Profit Company Registration:
1. Separate Legal Entity (Management & ownership is separate):
Non-Profit Company is a legal entity and a juristic person established under the Companies Act, 2013. Hence, a company has a wide range of legal capacities and the members (Shareholders/Directors) of a company have no personal liability to the givers/ creditors of a company for company's deficits or indebtedness.
2. Perpetual succession gives longest business life:
Section 8 Company also has 'perpetual succession', which means uninterrupted existence until it is legally dissolved. A company being a separate legal person, is unaffected by death or other departure of any member and it continues to be in existence irrespective of changes in ownership.
3. Globally recognition through charity and human welfare activities:
A Section 8 Company/ Non-Profit Company is undertaking or carrying on whether by itself or in partnership with or assigning to any other similar organization a charity and social welfare activities not only in India but also can conduct such activities with the help of some globally recognized organization(s) to help needy and poor people across the globe such as Indian Red Cross Society, World Health Organization, UNICEF, UNESCO, United Nations Foundation, Amnesty International, etc…
4. Owning Property in own name:
Non-Profit Company or Section 8 Company being an artificial person, can acquire, own, and alienate, property in its own name. The property owned by a company could be land and building, intangible assets, residential property, laboratory, experiment center, training center, entertainment and refreshment centers, schools, colleges, art galleries, etc. No shareholder can make a claim upon the property of the Charity Company or Section 8 Company not profit purpose.
5. Huge Income Tax benefits:
Charity companies registered under section 8 of the Companies Act, 2013 are compulsorily required to get itself registered under section 12A and 80G of the Income Tax Act, 1961 to get the exemptions and deductions related to charity and welfare activity. Also, the section 8 Companies are allowed to accept donations and funds from other Private Limited or Public Limited Companies towards Corporate Social Responsibility (CSR funding) under section 135 of the Companies Act, 2013.
What are the minimum requirements for Registering a Company in India?
- Minimum 2 Directors if Pvt. Ltd. Category or 3 Director if Public category
- Minimum 2 promoters if Pvt. Ltd. Category or 7 promoters if Public category *
- There is no minimum capital requirements
- DSC of the promoter - shareholders of proposed Company
- DIN of the proposed Directors
- Unique Name for the proposed Company
- RD License under section 8 of the Companies Act, 2013
- Registered office Address of the Company
* (The Directors and Shareholders can be the same persons.)
What is next after registration of Company ?
- Appointment of 1st Auditors
- Opening of Bank Accounts
- Filing of Declaration for Commencement of Business in form INC-20A, if there is share capital
- Minutes of Board meeting and their committees
- GST registration of the Company
- Registration under section 12A and 80G of Income Tax Act, 1961
- Trade Marks/ Copyright Registration
- Share Certificates to the subscribers, if there is share capital
- Preparing Statutory Registers
- Filing of Form AOC-4 for Statement of Income and Expenditure
- Filing of Form MGT-7 for Annual Return
- Filing of ADT-1 for appointment of 1st Auditor in AGM
What is the procedure for Company registration ?
Step 1: Obtain the DSC Tokens of all the shareholders
Step 2: Apply for Name Reservation
Step 3: Filing of Form INC-12 for Section 8 License
Step 4: Prepare and filing of Form Spice Form INC-32 for incorporation
Step 5: Obtain the Certificate of Registration
Step 6: File Form INC-20A for Declaration of Commencement of Business
The entire process for registration of Company will take at least 20 to 30 working days from the receipt of all the necessary documents and filing with the ROC.
What Documents are required for Company Incorporation ?
- Copy of PAN Card of all Directors & Promoters
- Passport size photograph of Directors & Promoters
- Copy of Aadhaar Card/ Voter identity card/ Passport/ voting ID card of Directors & Promoters
- Copy of Rent agreement (If rented property)
- Electricity/ Gas bill/ Water Bill/ Electricity Bill/ Bank Statement for Office of Company
- Copy of Index II or Property Tax Receipt (If owned property)
- Landlord NOC (Format will be provided)
Precautions to be taken while name reservation
1. Meaningful: The name of your company should have some meaning even though more than two words combination is used. The name taken by the promoters of the Company should not be able to be challenged by anyone.
2. Unique: It should not create resemblance with the existing Company or LLP names or even the Trade Marks (either registered or in the process of registration).
3. Activity reflecting: In the name of your proposed Company, activity or main business object should be reflected or represented.
4. Should not be illegal / offensive: The name of your company should not be against law. It should not be abusive or against the customs and beliefs of any religion.