What are the Rules and Regulations under Section 8 Company Registration?

Company registration is the process in which an entity gets registration to become a separate legal entity. Company registration is not only done by the specific organization but of any business that can be private, public, or the non –profit organization which would help the lower group of the society so, that the company who is registered under Section 8 company registration can work according to law and in proper procedure. Through the registration, it brings several benefits to the company as it gets legal protection. It is mandatory for such organizations and companies to register under section 8 of the Companies Act, 2013, and to follow the rules and regulations provided under this section.

What is Section 8 Company?

Generally, Section 8 Company is a non-profit organization that is formed to promote commerce, arts, science, education, sports, research, social welfare, religion, charity protection of the environment, or such another object. The utilization of profits from these non -profit companies is to meet the objective and for the welfare of the company.

Under section 8, the company is registered under the Central Government’s Ministry of Corporate Affairs whereas, trust and societies are registered under State Government regulations.

Various Advantages of Section 8 Company Registration

• Plenty of Exemption and privileges as per Companies Act, 2013
• The company gets an exemption from paying stamp duty.
• Privilege in the deduction of taxes to the donor of the company.
• Receipt of Funds in the form of donations.
• Easy transfer of shares
• Exemption for keeping suffix, titles.

Last name attached to the company under section 8 Company Registration

As the government allows their companies to register as ‘limited’ companies but these types of companies cannot use the word ‘Limited or Private Limited’ after their name.

The word which is allowable are as follows:

• Confederation
• Foundation
• Association
• Forum
• Council
• Chamber
• Electoral trust

Eligibility criteria under Section 8 Company Registration

• The objective of the company should be to encourage art education, social welfare, commerce, science, sports research, and financial assistance to the lower-income group.
• The entire fund in the form of donation must be for the objective of the company.
• The profit from the working of the company should not be distributed by the members of the directors of the company in any form i.e., directly or indirectly.
• Vision and company plans for the next 3 years should be clear.

Statutory obligation under Section 8 Company Registration

• The objective of the company should be achievable from the revenue and surplus generated by the operation of the company.
• The appointment of a company secretary is not necessary.
• No commissions and incentives will be provided to the members or directors of the company.
• An individual who wants to become a member or director of a company needs to bring any minimum share capital in Section 8 company registration.
• The director of the company can take a position in any other company.
• By giving short period notice annual general meeting of the company can take place.
• The objective and policy of the company can be not be altered by the company, for alteration prior permission from the central government of India is needed.
• If the company has obtained 80G or 12A registration from the income tax authority then the profit which has been earned by the company is hundred percent tax-free.

Documents required for registration of companies under Section 8 Company Registration

• Identity proof of all the members of the company.
• Passport size photograph of the members.
• Address proof of all the members.
• If the property is on rent, then the Rent agreement copy should be provided at the time of registration.
• No Objection Certificate (NOC) from the landlord
• Electricity/water bill of the premises
• Sample copy of the signature.
• A brief draft of the objective of the company

Rules and Regulation under Section 8 Company Registration

For registration under this section, you need to follow the below rules and regulations:

• The profit should be only to achieve the main objective of the company
• Then within three working days directors have to obtain Digital Signature along with Director Identification Number (DIN).
• Further, the applicant has to take the approval from the Ministry Of Corporate Affairs for the name of company.
• Then the applicant has to apply for the license from the Ministry Of Corporate Affairs.
• After the issuance of a license, apply through the SPICe web form
• E-file PAN and TAN applications are to be filed by the applicant.
• After the completion of the registration under section 8 of the company’s registration than the PAN and TAN will be send to the applicant with courier.
• Applicant can apply for the back account within thirty days after registration of the company.
• Then the company can apply for 80G and 12A registration with the Income Tax Authority so that company can get various exemptions from paying tax to the department.

Conclusion

Section 8 companies are non-profit organizations that are for the benefit of the lower-income group and for the purpose of charity to such people who are not capable and need help from such organizations. Section 8 company registration provides security in the form of legal protection to these companies. The benefits from the government are in the form of tax exemption which is one of the important criteria since they are not working for their personal profit. Instead, their profit is for the achievement of company’s objectives.