A non-profit organization, in India, may be licensed in compliance with Section 8 of the Companies Act, 2013 as a trust or under the Registrar of Societies or non-profits. A company of Section 8 is identical to Section 25 in accordance with the old Company Act of 1956. Section 25 (as per the old Statute) has been Provision 8 under the current Companies Act 2013.
According to section 8(1a, 1b, 1c) of the Companies Act 2013, a Business under section 8 can be created to promote commerce, literature, technology, athletics, education, study, social welfare, faith, charity, environmental protection or any other thing. The Act also stipulates that under the condition that a Section 8 company "intends to apply its profits, if any, or other revenues in the promotion of its objects," and "intentional to prohibit payment to its members of any dividend."
1. Registration Under: Companies Act, 2013.
2. License: License to be applied to MCA.
3. Directors: A Minimum of 2 Directors for a Private Limited Company and 3 Directors for Public Limited Company must be there. The maximum limit is of 15 Directors. More than that can be appointed after passing a special Resolution in a general Meeting.
4. Indian Resident: At least 1 director must be a resident of India, i.e., have stayed in India for a total period of not less than 182 days in the previous calendar year [(Section 149(3)].
5. Subscribers to MoA: If the Company is proposed to be incorporated as a private company or public company respectively, its MoA must have at least 2 or 3 subscribers.
6. MoA & AoA: Decide about the name to be applied for, objects to be carried by the Company, planned registered office address, number of Directors and promoters, authorized capital, and number of shares to be subscribed by each promoter. They must mention the plan laid-out to meet your social objectives. The ROC (Registrar Of Company) is entitled to ask about it.
7. Initial Capital: Whatever amount of initial capital has been proposed for the Company, it must get invested in the Company within 2 months.
8. Property Management: The ownership of the property lies in the name of the Company and it can only be sold as per the rules mentioned under the Companies Act. (Ex: With the consent of the Board of Directors in the form of a resolution).
9. Dissolution: The Section 8 Company may be wind-up only by following the bye-laws of the society. Upon dissolution and after settling all debts and liabilities, the funds and property of the society are not to be distributed among the members of the company. Instead, the remaining funds and property would be given or transferred to some other Section 8 Company, someone that has a similar object.
10. Annual Compliance: Annual filing of accounts, statements and the returns of the company with the ROC are necessary to meet the compliance required. Documents: All the Directors must have their valid DIN (Director’s Identification Number) & DSC (Digital Signature Certificate).
Step 1: Making an application for name availability in SPICe+ (Simplified Proforma for Incorporating company Electronically Plus: INC-32)] to the Registrar for a license under sub-section (1) of section 8.
Step 2: Preparation of Memorandum of Association and Articles of Association: Memorandum of Association of Section 8 Company must be in form INC-13 while there is no format prescribed for Articles of Association for Section 8 Company. One can adopt table F provisions.
Step 3: An application in Form No. INC.12 has to be submitted along with below-mentioned documents to the Registrar of Companies
Form no. INC – 13 – Company’s Draft Memorandum of Association (MOA) and Articles of association (AOA) in Form No. INC – 13 (as specified in Act) along with the affixation of subscribers’ photographs.
Form no. INC-14 – A Declaration is to be affixed in Form no. INC-14 that the draft MOA & AOA are compliant with the provisions & norms of section 8 and the requirements as per Section 8 have been duly taken care of.
Note: The declaration has to be made on stamp paper & should be notarized by an Advocate, a Company Secretary, a Chartered Accountant or a Cost Accountant, practising the profession.
Form no. INC-15 – A declaration in Form no. INC-15 on stamp paper & notarized by each member of the company who is applying.
Form no. INC-9 – Form no. INC-9 form first directors as well as each subscriber, on the relevant State’s stamp paper and appropriately notarized.
An estimation of the company’s future annual income and expenditure for the next three years, mentioning the sources of the income and the purpose of the expenditure
Step 4: Filing of SPICe 32 Form
Step 5: Filing of Documents and Forms for Registration
Step 6: Registration and Filing Fee:
The fee shall be as provided in the Companies (Registration Offices and Fees) Rules, 2014.
Step 7: Scrutiny of Forms and Documents by Registrar
On receipt of the aforementioned documents and forms, the office of the Registrar of Companies will scrutinise them and if they are found complete in all respects, the Registrar will register the company and allot CIN.
Step 8: Issue of Certificate of Incorporation by Registrar:
A Certificate of Incorporation will be issued by the Registrar of Companies under his hand and seal of his office and sent electronically. One may take printout of Certificate of Incorporation which is generated online.
Section 149(1) of the Companies Act 2013 – prescribed minimum of 3 & 2 directors for public limited & private limited company respectively and a maximum of 15 directors.
But there is no minimum or maximum prescription for section 8 company.