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Section 8 Company

  • NGOs in India can be registered under Registrar of Societies or as a Non-Profit entity under Section 8 Company of the Companies Act, 2013
  • Compliance with Companies Act is compulsory for Section 8 Company, including Filing returns with the ROCs, maintaining books of accounts, & complying with GST and IT Act Regulations
  • Section 8 Company in India cannot utilise profits for purposes other than charitable objectives & cannot distribute them among shareholders of the Company
  • Any alterations to the Charter Documents like AoA & MOA require consent from the Government
  • Section 8 Companies are identical to the former Section 25 Companies Under the Companies Act 1956 and now, they are recognized as such under the prevailing legislation

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NGO Registration Options:

  • NGOs in India can register under the Registrar of Societies or as a Non-Profit Entity under Section 8 of the Companies Act, 2013.
  • Refinement: Clearly mention that trusts, societies, and Section 8 companies are the three main types of NGO registrations in India.

Mandatory Compliance Requirements:

  • Section 8 Companies must comply with Companies Act, 2013, which includes:
    → Filing Annual Returns with ROC (Registrar of Companies).
    → Maintaining Proper Books of Accounts.
    → Compliance with Income Tax Act and GST Regulations (if applicable).
  • Refinement: Instead of “Filing returns with the ROCs,” a better phrase would be “Mandatory filing of financial statements (AOC-4) and annual returns (MGT-7) with the Registrar of Companies (ROC).”

Profit Utilization Restriction:

  • Confirmed: Profits cannot be used for any purpose other than the company’s charitable objectives.
  • Confirmed: Section 8 companies cannot distribute profits among shareholders or members.

Government Approval for Changes to MOA & AOA:

  • Confirmed: Any changes to the Memorandum of Association (MOA) & Articles of Association (AOA) require prior approval from the Central Government.
  • Refinement: It’s best to specify that approval is sought through the Ministry of Corporate Affairs (MCA).

Identity with Former Section 25 Companies:

  • Confirmed: Section 8 Companies are the modern equivalent of former Section 25 Companies under the Companies Act, 1956.
  • Refinement: You may add that the structure, objectives, and legal provisions remain largely similar under the Companies Act, 2013.

Eligibility Criteria for Section 8 Company

 

Minimum Directors Requirement:

  • At least one director must be a resident of India.
  • For a private limited Section 8 company: Minimum two directors are required.
  • For a public limited Section 8 company: Minimum three directors are required.

 

Eligible Entities:

  • Individuals (Indian citizens), Hindu Undivided Families (HUFs), and corporate entities can establish a Section 8 company.
  • The applicant(s) must comply with all legal and compliance requirements under the Companies Act, 2013.

 

Charitable Objectives Requirement:

  • The primary objective of the company must be one or more of the following:
    ✔ Advancement of science, art, education, research, and social welfare
    ✔ Promotion of sports, arts, literature, and cultural development
    ✔ Financial support to lower-income or disadvantaged groups
    ✔ Environmental protection and sustainability initiatives

 

Minimum Shareholders & Compliance Obligations:

  • At least two or more individuals must act as Directors/Shareholders and fulfill all legal requirements for registration under the Companies Act, 2013.

 

Restriction on Remuneration & Profit Distribution:

  • Directors, founders, and members cannot receive remuneration in any form (cash or kind) for their roles in the company.
  • No profit or surplus income of the company can be distributed directly or indirectly among its directors, shareholders, or members.
  • Any income must be reinvested in furthering the company’s charitable objectives.

DOCUMENT REQUIRED

Identity & Address Proof of Directors or Shareholders

✔ Passport-size Photographs (Latest, with a white background)

✔ Identity Proof (Any One of the Following):

  • Aadhaar Card
  • Voter ID
  • Driving License (DL)
  • PAN Card (Mandatory for all Indian citizens)
  • Passport (Mandatory for NRIs or Foreign Nationals)

✔  Address Proof (Any One of the Following – Not Older than 2 Months):

  • Latest Bank Statement
  • Electricity Bill
  • Water Bill
  • Gas Bill

 

✔  Residential & Identity Proof of Subscribers & Nominees

  • Registered Office Address Proof

 

✔ Owned Property:

  • Latest Electricity Bill / Water Bill / Gas Bill (Not older than 2 months)
  • Property Tax Receipt OR Sale Deed

 

✔ Rented Property:

  • Rent Agreement (In the Company’s Name)
  • No Objection Certificate (NOC) from the Landlord

 

Foundational & Compliance Documents

✔ Memorandum of Association (MOA) – Defines the company’s objectives
✔ Articles of Association (AOA) – Contains the internal management rules
✔ Declaration by the First Director & Subscriber (INC-9 Form) – Now an affidavit is NOT required
✔ Consent of Nominee (INC-3 Form) – Required if the company has a nominee
✔ Digital Signature Certificate (DSC) – Mandatory for all directors & authorized signatories

 

Additional Documents (If Applicable)

✔ Copy of Incorporation Certificate of an Overseas Corporate Body (If the company is an overseas entity)
✔ A Resolution Passed by the Promoter Company (If applicable)
✔ Declaration of Unregistered Companies (If applicable)

Step 1: Obtain DSC & DIN

Digital Signature Certificate (DSC):

  • The first step is to obtain a DSC for all proposed directors.
  • Required Documents: PAN, Aadhaar,Passport-size photo, Email ID,  and Mobile Number.

 

Director Identification Number (DIN):

  • Filing of Form DIR-3 is NOT required separately for new companies.
  • DIN is now applied directly through SPICe+ (INC-32) during incorporation.
  • If the applicant is an existing director, then DIR-3 form is required.

 

Step 2: Filing of INC-12 for Section 8 Company License

Application for License:

  • After obtaining DSC, the applicant needs to file Form INC-12 with the Registrar of Companies (ROC).
  • This form is used to apply for a License under Section 8 of the Companies Act, 2013.
  • The applicant must submit:
    → Draft MOA & AOA
    → Declaration in Form INC-14 (by a practicing CA, CS, or Cost Accountant)
    →  Declaration in Form INC-15 (by the company’s subscribers)

 

Approval & Issuance of License:

  • Once the ROC verifies and approves the application, they issue the Section 8 Company License in Form INC-16.

 

Step 3: Filing of SPICe+ Form for Incorporation

After obtaining the Section 8 License (Form INC-16), the next step is to file the incorporation form SPICe+ (INC-32).

 

Documents Required:

  • License under Section 8 (INC-16)
  • Memorandum of Association (MOA) &

 

Articles of Association (AOA)

  • Identity & Address proof of Directors and Subscribers
  • Registered Office Address Proof (Utility Bill, Rent Agreement, NOC from Owner)
  • Declaration of Subscribers & Directors (INC-9)
  • Declaration of First Director (DIR-2)

 

Integrated Services via SPICe+:

  • Company Name Reservation
  • Allotment of DIN for new Directors
  • Issuance of PAN & TAN
  • Registration for GST, EPFO, ESIC, and Professional Tax (if applicable)

 

Final ROC Approval & Certificate of Incorporation (COI):

  • Once the SPICe+ form is verified and approved, the ROC issues the Certificate of Incorporation (COI) along with CIN, PAN, and TAN.

Auditor appointment

  • Appoint an auditor to audit the company’s financial statements
  • File Form ADT-1 with the Ministry of Corporate Affairs (MCA) within 15 days of the Annual General Meeting (AGM)

Statutory register maintenance

  • Maintain a statutory register that includes details of the company’s members, loans, costs, and directors
  • Record details of the company’s investments, charges, and changes in directorship

Meetings

  • Hold an Annual General Meeting (AGM) twice a year
  • Conduct other statutory meetings as required by regulations

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Frequently Asked Question

What are the key features of a Section 8 Company?

  • Non-Profit Motive – Profits are used for charitable purposes, not for personal gain.
  • Limited Liability – Members have limited liability.
  • No Minimum Capital Requirement – No minimum capital is required.
  • Government License – Requires approval from the Registrar of Companies (RoC).
  • Tax Benefits – Eligible for Section 12A and 80G exemptions under the Income Tax Act.

Who can register a Section 8 Company?

  • Individuals or groups planning to promote social welfare.
  • Registered societies or trusts can also be converted into Section 8 Companies.

Can a Section 8 Company distribute profits to its members?

  • No, a Section 8 Company cannot distribute profits to its members. All income must be used for charitable or social purposes.

What are the compliance requirements for a Section 8 Company?

  • Annual filings with the MCA.
  • Statutory audit of financial statements.
  • Filing of Income Tax Returns (ITR).
  • Holding of Board Meetings & AGMs.

Can a Section 8 Company be converted into another type of company?

Yes, but prior approval from the NCLT (National Company Law Tribunal) is required.

Are donations to a Section 8 Company tax-exempt?

Yes, if the company is registered under Section 80G & 12A of the Income Tax Act, donors can claim tax benefits.