Section 8 Company under Indian Companies Act, 2013 in Agra

The primary objective of forming a corporation as a Section 8 Company is to promote non-profit objectives such as commerce, business, the arts, charity, education, religion, environment protection, social welfare, sports research, etc. A Section 8 Company cannot be established without a minimum of two directors. A Section 8 Company’s minimum paid-up capital is also not required. Under Section 8 of the Companies Act, 2013 (Act), as a non-profit corporation, or through the Registrar of Societies, a non-profit organization may be formed in India. Any profits made by this company will be put toward achieving its objectives rather than being distributed to shareholders as dividends.
We’ll talk about Section 8 Company Incorporation requirements and Section 8 Company registration in Agra in this article.

Quick Look

A company that was established with the goal of improving business, the arts, sciences, sports, research, education, the religious community, the preservation of the environment, charity giving, or any other goal is known as a Section 8 Company. Additionally, it is one that seeks to use its money and earnings to promote its goals and bans the distribution of dividends to its members. A section-8 company can be established as either a private or public company.

Section 8 Companies are similar to trusts and societies in that they are registered in accordance with the “Ministry of Corporate Affairs (MCA)” of the Central Government rather than state government regulations. Funders and stakeholders are more likely to trust companies and charitable organizations that are recognized at the national level.

An overview of Section 8 of the Companies Act, 2013

A company is described as one that works to promote the humanities, sciences, sports, education, environmental protection, social welfare, charity, or other objectives of a similar nature under Section 8 of the Companies Act, 2013.

The major argument against establishing a Section 8 Company is incentives for non-profit goals such as business, the arts, commerce, education, philanthropy, environmental protection, sports research, social welfare, etc. A Section 8 company cannot be registered unless it has two directors. A minimum amount of paid-up capital is not necessary to form such a corporation, either.

Registration of Section 8 Companies in Agra

Agra is a small city in Uttar Pradesh that is situated by the Yamuna River. Despite being well-known for its monuments, Agra also boasts a sizable industrial base. King Sikandar Lodhi laid the groundwork for the present-day city of Agra back in the 16th century. A member of the Lodhi dynasty, Sikandar Lodhi was a king. In the Mughal era, Agra was regarded as one of India’s most important and powerful towns.

The establishment of the district industries centre in Agra in 1979 aided in accelerating the growth of industry inside and surrounding the city. For the purpose of creating any industry in the district, the District Industry Center serves as the nodal agency.

The Industrial Estate of Nunhai is Agra’s primary industrial region. Electrical items, pipes, fans, C.I. casting, steel rolling, flooring, packaging, and dairy products are among Agra’s significant businesses. About 7200 units fall under the small-scale industries category. They manufacture cotton and textiles, office supplies, leather goods, wood, paper, and metal items, as well as vehicle and engine parts.

Additionally, Agra hosts various philanthropic events, making it the perfect choice for establishing a Section 8 Company in Agra.

Advantages of Section 8 Company Incorporation

The main benefits of establishing a Section 8 company in India are as follows:

• There Are No Taxes: The complete tax exemption is available to Section 8 companies that are registered under Section 12AA of the Income Tax Act, 1961. These organizations are not taxed on their income since it is used for charitable purposes.
• There is no required minimum investment: There are no basic restrictions for section 8 companies with regard to the minimum capital need, in contrast to other businesses like the Public Limited Company. These organizations, however, are allowed to change their capital structures in accordance with the growth of the company.
• Stamp duty is not necessary to pay: A Section 8 Company is not needed to pay stamp duty for registration, in contrast to other businesses like public limited companies or Private Limited Companies.
• Separate legal entity: Similar to other registered businesses, a Section 8 corporation has its own legal identity and has independent legal standing from its member. These facts support the notion of eternal existence.
• Greater Reputation: A Section 8 Company is more trustworthy in terms of compliance and legal standing. These groups frequently function inside a rigid legal framework developed by the appropriate authorities. In contrast to NGOs and Trusts, these entities follow tight compliances following registration.
• No title is required: Companies registered under Section 8 are free to choose their company name at any time throughout the registration process. Unlike other registered works, they are not needed to include a term like “Section 8” after their name.

Criteria for Section 8 Applications for Company Incorporation

A person or group of people may register as a Section 8 Company if they have any of the following objectives. The objectives must be satisfactorily completed in the eyes of the Central Government.

• When a company seeks to develop commerce, science, education, the arts, sports, research, religion, charity, social welfare, environmental preservation, or comparable objectives;
• When the company aims to spend all profits (if any) or any income it earns after incorporation only for the advancement of such aims;
• When the company has no plans to provide any dividends to its shareholders.

Section 8 Company Incorporation Requirement

The following conditions must be met in order to establish a Section 8 company:

• Directors: A minimum of two directors are required to form the Section 8 Company as a private limited company; a minimum of three directors are required to form the company as a public limited company. A public limited company is not subject to the 200-member limit that applies to private limited companies.
• Capital Requirement and Name: There is no requirement for a minimum paid-up capital when a Section 8 business is created. The requirement that NGOs created as Section 8 companies contain “Limited” or “Private Limited” in their name is not applicable to them.
• Items connected to charities: Companies created under Section 8 are intended for philanthropic purposes. The MOA and AOA must specify the non-profit purpose for which it was established. Any profits earned by the Section 8 Company are invested back into the company or utilized to further the organization’s primary objectives, which are philanthropic purposes. No income share will be given to members.
• Management: Section 8 companies are controlled by the Board of Directors in accordance with the MOA and AOA of the company, as opposed to other trusts, which are governed by the Trustees in accordance with the Trust Deed.
• Rules created by a number of Acts: A Section 8 Company is required to abide with all laws and regulations outlined in the Companies Act. It must make reports to the Registrar of Companies and maintain correct financial records. Section 8 Company may not make any changes to the provisions of the MoA or the AoA without the prior approval of the Central Government. Additionally, it must follow the guidelines of the Income Tax Act, 1961 and the GST Law.
• Apply for a Director Identification Number (DIN): You must submit a DIN application for each potential director of the company. The application for DIN allocation must be submitted using Form DIR-3 or the SPICe+ registration form. You must also provide a scanned copy of the necessary supporting documents, such as the directors’ PAN and proof of identity and residence, while completing the form online through the MCA Portal. The form must be certified by a working professional, who may be a cost accountant, a company secretary, or a chartered accountant.

How to Create a Section-8 Company?

The following are the procedures for forming a Section 8 company:

• Complete the Application’s Form: First, you must respond to the brief questionnaire that our helpful team has provided.
• Documents for Processing: Based on the information you provided in the questionnaire, we will require the documents at the second step in order to process them.
• Application of DSC: The first step is to create a DSC (Digital Signature Certificate comprised of E-signatures). Those that are ready ahead of time may skip this step. It will probably take one to two days.
• Electronic filing for Company Formation: Once the name has been approved, the required documentation, which may be accessed from the list above, must be sent to ROC together with an online application using SPICE+. When carefully crafting the MOA and AOA, it is important to keep the primary objective of Section-8 Company in mind. Once more, this process requires two to three days.
• Certificate of Incorporation: You will eventually get a Certificate of Incorporation and Section-8 License via email upon approval, acting as legal documentation indicating the Company has been established.

Endnote

Section 8 company formation gives more benefits than trust and society. Government organizations, donors, and other stakeholders have a higher level of confidence in this type of company. In this article, we have clarified how to register as an NGO under the Companies Act, 2013 as a Section 8 Company.

The Central Government will revoke the Section 8 company license if it is found to be in violation of the Act’s legal provisions. If the company’s objectives are being pursued dishonestly or in opposition to the objectives for which it was created, the license may be revoked. If a company violates the Act’s standards, it might be punished with a fine of at least Rs. 10 lakh and as much as Rs. 1 crore. The directors and officers of the company who breach Act requirements must pay a fine of at least Rs. 25,000 and a maximum of Rs. 25 lakhs, or both.

By simply following a few easy steps, Legal Window can help you register a Section-8 Company and provide you with a comprehensive overview of this type of company. Please get in touch with our team at 072407-51000 or admin@legalwindow.in for Section-8(Foundation) company registration and compliance services.