Section 8 Company/NGO
A Non-profit organization can be registered under different options:
- Society, under Registrar of Societies
- Trust, by making a Trust Deed
- Section 8 Company under CompaniesAct, 2013
According to Section 8(1)(a), (b) and (c), a company can be established ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided 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.
Advantages of Section 8 Company:
No Minimum Capital
- These companies can be formed with or without share capital as necessary funds can be brought in the form of donations, subscriptions from members and general public.
Exemption from Stamp Duty
- NGO’s or Section 8 company need not require Stamp Duty for registration.
Firm as a member
- As per Section 8(3) a partnership firm may become a member of the non-profit making company registered under Section 8. Membership of such firm shall cease upon dissolution of the firm. However, partners of the dissolved firm may continue to be the members of such company in their individual capacity.
FAQ of Section 8 Company:
What are the documents required for registering Section 8 Company?
- PAN Card
- ID-proof (Voter ID/Aadhar Card/Driving License/Passport)-Any 1 of Directors
- Address Proof (Electricity Bill/Telephone Bill/Bank Statement)-Any 1
- For Residential Address:
- Rent agreement along with latest rent receipt (in case premises are rented)
- House Tax Receipts (in case premises is owned)
- Electricity Bill
- NOC from the owner (for format)
- Office Address proof of the company is needed.
- Copy of Sales Deed
- If the applicant is NRI, then the documents must be notarized and passport is compulsory.
Is it possible to covert Section 8 company to a Private Limited Company?
- Yes, it is possible and vice-versa after approval of ROC.
Is it permitted to register a Section-8 company for an NRI?
- Yes, an NRI can register a Section 8 company provided all the documents required are submitted and notarized by professionals.
What is the minimum no. of persons required to form a Section 8 company?
- Private Limited Company: Minimum-2; Maximum-3
- Public Limited Company: Minimum-2; Maximum-7
What is Digital Signature Certificate?
- Digital Signature Certificate (DSC) is an electronic signature, which is in the form of codes. It is used for signing electronic forms, filed with ROC. It cannot be used in physical forms.
What is Director Identification Number (DIN)?
- It is a unique identification no. required to be mentioned in all documents by the director of the company. A director after obtaining DIN shall have to inform the company.
What is MOA and AOA of company?
- MOA mean Memorandum of Association and AOA is Articles of Association. These are the bylaws or rules which defines the objects, scope and legal liabilities of the company. Any company registered with Taxoservice, we will be providing a hard copy of MOA and AOA along with a soft copy.
Can Section 8 Company distribute its profit to anyone?
- Profit or Income of Non Profit Company can only be used for promotion of the charity work in which it is involved. Even declaration of dividend or distribution of profit to its promoters is not allowed.
Can promoters of Non profit company can be employed as paid employee of the company?
- No, promoters of Non profit company can be employed as paid employee of the company.