For the purpose of promotion of commerce, art, science, religion, charity or any other useful object, a company can be incorporated after obtaining section 8 license from the central government. The license is essentially permission to delete private Limited from the proposed name.
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Section 8 company is suitable for non-profit objective and it may a private limited or a public limited company. As per law in case the proposed section 8 company is a private limited then minimum two promoters is required, however in case it is a public limited section 8 company then minimum 7 person must be the promoters of the company. A ‘Section 8 Company’ is eligible for certain exemptions from provisions of law and a concessional rate of fees. The process of incorporation of a section 8 company is similar to that of any other company registration in India with an additional requirement of seeking a prior license from the central government under section 8 of the companies act, 2013.
The companies registered under section 8 of the companies act, cannot distribute profits or assets to its members.
The voting rights to the members of section 8 company are based on the number of shares, similar to that of any other company.
There is no minimum level of capital prescribed, hence a section 8 company can be incorporated with the capital as required by it.
One director of the company must be resident in India. A person is said to be a resident when he stays in India for at least 182 days in the FY.
As the application for Company Incorporation is filed online, the process starts with the issuance of Digital Signatures of class two.
The Company name must be unique and should not be the same or similar to an existing company, LLP or a trademark.
An application is filed before the central government for grant of license to incorporate a company without Limited in their name.
An application is made to the ROC office for incorporation of section 8 company, and allotment of PAN and TAN.
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The name of a section 8 company shall not include Private Limited or Limited at the end of its name and must end with any of the below words
Yes, Foreign Direct Investment is allowed Section 8 Companies subject to the compliance of FEMA Regulations. However, in terms of the Foreign Contribution (Regulation) Act, 2010 [FCRA] read with the Frequently asked questions (FAQ) on the website of the ministry of the home of the union government of India, the infusion of capital in a section 8 company is a foreign contribution. In simple words, though FDI in section 8 companies is permissible, as the same is considered as a Foreign Contribution in terms of FCRA, it can be infused only with prior permission/registration from the central government.
Yes, there is no specific restriction on making an investment in any other company by section 8 companies even if the investee company is a profit-making entity.
In case the section 8 company is incorporated as private limited the minimum requirements of directors on the board is 2 and in case of a public limited company it must be 3
For incorporation of a section 8 company under the companies act, 2013, any document from below list of the document is acceptable as Identity Proof of the director or shareholder or the proposed company.
For Company Incorporation, any one document from below list of address proof of the director or shareholder is acceptable. The document in support of address proof should not be older than two months.
A Section 8 Company is incorporated with a physical address to be declared as the registered office of the newly registered company. Following are the list of the document which is acceptable as proof of premises where the registered office of the company is situated. The premises proof should not be older than two months.
Before a company occupies any premises as its registered address, a no objection certificate must be obtained from the owner of the premises. Similarly, at the time of filing for company registration, we need a NOC from the current owner of the premises along with proof of ownership as explained above.
A registered office is required to be declared at the time of company incorporation and to be maintained by the company under section 12 of The Companies Act, 2013, which must be capable of receiving and acknowledging all communications and notices as may be addressed to it. Further, the statutory records of the company also need to be maintained at the registered address of the company. Hence having registered address at co-working space is not acceptable unless this is a lockable area.
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