A Section 8 Company is a nonprofit organization dedicated to promoting charitable, educational, social welfare, cultural, scientific, or environmental activities. At Mytaxwala, we specialize in assisting you with the entire process of registering your Section 8 Company, so you can focus on your mission without worrying about legal complexities.
Under the Companies Act, 2013, a Section 8 Company is a nonprofit entity that uses its profits exclusively to achieve its set objectives. Unlike profit-driven companies, a Section 8 Company reinvests all surplus funds into furthering its charitable or social goals rather than distributing dividends to its members. This structure is ideal for organizations aiming to promote art, science, education, research, sports, charity, or environmental protection.
Registering a Section 8 Company in India means setting up an organization with a clear social or charitable purpose. The process is designed to ensure transparency and accountability. A Section 8 Company must maintain strict compliance with the Companies Act, including proper record-keeping and regular filings with the Registrar of Companies (RoC). At Mytaxwala, we make this process straightforward and cost-effective, guiding you every step of the way from documentation to final approval.
Section 8 Companies are governed by the Companies Act, 2013. They are similar to the former Section 25 Companies and are mandated to use their profits solely for the promotion of their stated charitable purposes.
● Directors & Members:
○ A minimum of two directors is required for a private Section 8 Company and three for a public one.
○ There is no fixed requirement for the number of members; however, private companies are capped at 200 members by the MCA.
● No Minimum Capital Requirement:
○ Section 8 Companies do not require a set minimum paid-up capital, offering financial flexibility.
● Nonprofit Objectives:
○ The primary purpose must be to promote charitable, educational, social, or similar noncommercial activities.
● Name Selection:
○ The company name should reflect its nonprofit nature. Unlike other business entities, there is no compulsion to append “Section 8” in the name.
● Tax Exemption:
○ Eligible for 100% tax exemption under Section 12AA of the Income Tax Act, provided profits are utilized for charitable activities.
● No Minimum Capital Requirement:
○ Flexibility in determining capital structure without a mandated minimum.
● Separate Legal Entity:
○ The company exists as a distinct legal entity, ensuring continuity and enhancing credibility.
● Enhanced Credibility:
○ Adherence to strict regulatory compliance improves trust among donors, partners, and stakeholders.
● Attractive for Donations:
○ With Section 80G registration, donors can claim tax benefits on their contributions, making your organization more appealing to funders.
● No Title Constraints:
○ You have the freedom to choose a name that accurately represents your social cause without mandatory qualifiers.
Section 8 Companies cannot raise funds by collecting deposits or issuing shares. Instead, they rely on donations (both domestic and foreign) and other types of funding like equity investments at a premium. Foreign contributions are permissible upon obtaining FCRA registration, and equity funding may be utilized subject to regulatory norms. Additional registrations under Section 12AA and 80G can further enhance funding prospects by offering tax deductions to donors.
At Mytaxwala, our step-by-step LLP registration service for Section 8 Companies ensures a smooth and seamless process:
○ Secure DSCs for all proposed directors as they are required for online filings.
○ File Form DIR-3 to obtain DINs for all directors.
○ Use Form INC-1 to reserve a unique name that reflects your nonprofit mission.
○ Submit Form INC-32 along with your Memorandum of Association (MOA) and Articles of Association (AOA) that explicitly state your charitable objectives.
○ File Form INC-12 with the requisite supporting documents to obtain the license.
○ Once approved, the Registrar of Companies will issue your Certificate of Incorporation via Form INC-16.
○ Complete the additional registrations with the Income Tax Department to secure PAN and TAN for your nonprofit organization.
● Memorandum of Association (MOA) & Articles of Association (AOA):
Clearly stating the nonprofit objectives.
● Proof of Registered Office Address:
Rent agreement, utility bill, or ownership document.
● Identity and Residence Proof:
For all proposed directors (e.g., PAN card, Aadhaar, Passport).
● Digital Signature Certificates (DSC) and DINs:
For all directors.
● Declaration and Consent Forms:
Including INC-3 (Consent of Nominee) and any resolutions passed by the promoters.
● Additional Documents (if applicable):
Such as the Certificate of Incorporation for any foreign corporate body and a no-objection certificate from the landlord.
Following incorporation, Section 8 Companies must:
● Maintain proper books of accounts and file annual returns with the RoC.
● Comply with the GST and IT Act requirements as applicable.
● Seek government approval for any changes to the MOA or AOA.
● Secure and renew 80G registration periodically (currently valid till March 2025, renewable thereafter) to continue offering tax benefits to donors.
At Mytaxwala, we simplify the complex process of registering a Section 8 Company with our end-to-end online services. Our experienced team ensures that:
● All legal formalities are met in a timely and cost-effective manner.
● You receive expert guidance on documentation, compliance, and post-incorporation requirements.
● Your organization is positioned to benefit from tax exemptions and enhanced credibility.
● You can focus on your social and charitable objectives while we manage the regulatory requirements.
Embark on your nonprofit journey with Mytaxwala. Contact us today to begin your Section 8 Company registration process and make a lasting impact with your social initiatives.