What is a Section 8 Company?

A Section 8 company is a non-profit organization formed under Section 8 of the Companies Act, 2013. It’s established to promote charitable objectives like commerce, art, science, sports, or environmental protection. Unlike other companies, Section 8 companies do not aim to earn profits. Any income or profit must be used to promote the company’s objectives.

Starting a non-profit organization in India can be a rewarding experience. If you want to promote social causes like education, charity, or research, Section 8 company registration is a great option. As a tax consultant at Taxlegit, I, Deeksha Khurana, help entrepreneurs and philanthropists like you navigate the process of setting up a Section 8 company. In this blog, I’ll explain how to register a Section 8 company and why it’s different from Pvt Ltd company registration.

Difference Between Section 8 and Pvt Ltd Company Registration

While Pvt Ltd company registration focuses on profit-making ventures, Section 8 companies focus on social objectives. In a Pvt Ltd company, profits can be distributed among shareholders, while Section 8 companies cannot distribute dividends. Both company types require registration with the Ministry of Corporate Affairs (MCA), but the purpose and structure differ greatly.

Step 1: Name Approval for Section 8 Company

The first step in registering a Section 8 company is choosing a name. The name should reflect the purpose of your organization and must comply with MCA guidelines. I help you submit your preferred names to the Registrar of Companies (RoC) for approval. Once the name is approved, you can move forward with the registration process.

Step 2: Drafting Memorandum and Articles of Association

For Section 8 company registration, you must prepare a Memorandum of Association (MoA) and Articles of Association (AoA). These documents outline the company’s objectives, rules, and structure. The key focus in these documents is to emphasize the non-profit nature of the organization. At Taxlegit, I ensure these documents meet all legal requirements.

Step 3: Apply for Digital Signature Certificate (DSC)

Like in Pvt Ltd company registration, you need a Digital Signature Certificate (DSC) to file forms electronically. Each director must obtain a DSC from a licensed certifying authority. The DSC allows you to submit documents securely to the MCA. I can assist you in obtaining your DSC without any hassle.

Step 4: Apply for Director Identification Number (DIN)

Every director of the Section 8 company must have a Director Identification Number (DIN). You can apply for this through the MCA portal. It’s essential to ensure that each director’s identity is verified and approved before moving forward with the registration.

Step 5: File the Incorporation Documents

Once you have your DSC and DIN, it’s time to file the incorporation documents with the MCA. This includes submitting your MoA, AoA, and a declaration that the company will be used for non-profit purposes. You also need to provide proof of the registered office address.

Step 6: Apply for License Under Section 8

After submitting your incorporation documents, you need to apply for a license under Section 8. This license allows your company to operate as a non-profit entity. You must submit the application to the RoC along with supporting documents. Once approved, the MCA issues your Section 8 license.

Step 7: Obtain GST Registration

Like other businesses, Section 8 companies may require GST registration if they engage in the sale of goods or services. Even though the company operates on a non-profit basis, complying with tax regulations is crucial. I help you apply for GST registration to ensure your organization remains compliant with all tax laws.

Step 8: Consider ISO Certification

Obtaining ISO certification can enhance the credibility of your Section 8 company. While it’s not mandatory, ISO certification demonstrates that your organization meets international standards of quality and management. This can be especially beneficial if you plan to collaborate with other organizations or seek funding from international donors. At Taxlegit, I guide you through the process of applying for ISO certification.

Benefits of Registering a Section 8 Company

• Tax Exemptions: Section 8 companies enjoy various tax benefits, including exemptions under the Income Tax Act.
• Credibility: The legal structure adds credibility to your organization, making it easier to raise funds and gain support from donors.
• Separate Legal Entity: A Section 8 company is a separate legal entity, providing limited liability protection to its members.

Final Thoughts

Setting up a Section 8 company is a great way to contribute to society while enjoying legal benefits. With the right guidance, the registration process becomes manageable. At Taxlegit, I help you through every step, from name approval to obtaining your license. Whether you need help with Section 8 company registration, Pvt Ltd company registration, or even ISO certification, I ensure that all legal requirements are met so you can focus on your mission.

Ready to register your Section 8 company? Contact me at Taxlegit today, and let’s bring your vision to life!