Introduction
The majority of us are familiar with businesses like public limited companies, LLPs, and private limited corporations. These are real companies that offer services or create any kind of goods on the market. Contrarily, Section 8 businesses are set up across a variety of industries for the benefit of society.
These are limited businesses that have been formed under the Companies Act and will continue to be considered as such even though their names do not contain the word "limited." Either as "private limited or public limited businesses," they may have been registered. These Section 8 businesses are very different from typical commercial enterprises. In this article, some of the main advantages of a Section 8 company are covered.
What is Section 8?
The ability of the central government to consider a company as an establishment, not a branch office. The Central Government has the authority to issue an order stating that, in the case of any company, either (1) any establishment carrying on the exact or considerably the same task as that carried out by the company's head office, or (2) any institution involved in any production, processing, or manufacture, shall not be regarded as a branch office of the organization for all or any purposes of this Act.
Who is eligible to create a Section 8 company?
A Section 8 Corporation must be registered as a Non-Profit Organization, according to the Companies Act of 2013. (NPO). A Section 8 business promotes the performing and visual arts, business, education, charitable giving, environmental preservation, sports, social welfare, and religion. A Section 8 company's main goal is to use its earnings or other income to advance its main goals.
Any individual or entity that wishes to register as a Section 8 firm must uphold a certain set of goals or purposes by the regulations set forth by the federal government.
Requirements for section 8 Companies Act:
The following requirements are to be met for a company to be registered under section 8.
There should be at least two shareholders for that company that is seeking registration.
Furthermore, Section 8 of the 2013 Companies Act stipulates that you must apply for a license from the government.
There should be at least two Directors for a private limited company and 3 for public limited companies (shareholders and directors may be the same individual);
One of the directors must reside in India at all times means he should have stayed in India for a total period of not less than 182 days in a previous calendar year;
There must be a valid name for the company.
There is no minimum share capital, unlike the other companies.
Who May Submit an Application for a Section 8 Company?
An individual or a Hindu Undivided Family (HUF) may set up a Section 8 corporation in India. Notwithstanding, the incorporation of the company necessitates at least two persons to function as directors or shareholders, who must complete all the legal and regulatory requirements as provided by the Act.
A business can apply to become a Section 8 company if it aims to further social welfare, environmental protection, social welfare, commerce, sports, education, research, charity, and other similar goals.
The company is eligible to register as a Section 8 corporation if it intends to spend its profits (if any) or other income in advancing social welfare or its principal purpose of supporting such objectives.
The company may also apply to be registered as a Section 8 company if it decides not to distribute any profits to its shareholders as dividends.
Important Information About Establishing a Section 8 Company
The Companies Act of 2013 is the fundamental law that establishes the process for incorporating a Section 8 Company. The clause states that to get Section 8 business formation, a person or organization must submit Form No. INC.12. Also, several other documents must be presented with it.
Form No. INC - 13: The business' draught of the Act-required Memorandum of Association (MOA) and Articles of Organization (AOA), coupled with applicant pictures.
Form no. INC-14: A declaration form must be submitted by the applicant with Form no. INC-14. Its purpose is to guarantee that the MOA and AOA abide by the rules and regulations of section 8. On a stamp paper certified by an advocate, a chartered accountant, a company secretary, or a cost accountant, the applicant must maintain the conditions outlined in the legislation.
Form No. INC-15: The Form requires a statement from the applicant on official letterhead that has been notarized by each applicant firm member.
Form INC-9: Form INC-9 Both the directors and each subscriber should adhere to the form. Also required are a notary public and State stamp paper. The applicant is required to disclose the company's projected annual expenses and revenue for the following three years. They must also list their sources of income and the reason for their expenditures.
Documents required for Section 8 Company
Income taxes PAN is a condition that must be met for Indian nationals;
It is necessary to present identities proof, such as a voter ID, Aadhar card, driver's license, or passport; However, for foreign nationals, a passport is required for the evidence of identity;
Any one of the following for checking residence: an electricity bill, a telephone bill, a mobile phone bill, or a bank statement;
The proof of the registered office address, which is the lease agreement, the most recent rent receipt, a copy of the most recent utility bill in the landlord's name, and, in the event of rented property, a letter from the property owner stating that they have no objections;
Any of the ownership-establishing documents, such as a sale deed, house tax receipt, etc., combined with the certificate of no objection, if the property is held by either the Director or the Promoters.
Memorandum of Association- The organization's founding principles are outlined in the Memorandum of Association, a legal document. It is a guidebook that contains all the rules and legislation that apply to how a business interacts with the external world.
The MoA for the Business must contain at least two or three subscribers, depending on whether it is recommended that it be formed as a private or public company.
Article of Association- The way a corporation will share resources, dividend payments, inspect financial records, and grant voting rights is frequently specified in the articles of organization. Because it describes the process for carrying out the daily duties that must be done, this list of regulations can be seen as the company's user handbook.
Director Identification Number (DIN)- An person who is appointed as a director of a business is given a DIN after applying by sections 153 and 154 of the Companies Act of 2013. All directors must have a DIN and a Digital Signature Certificate which is DSC.
Conclusion
The businesses created by Section 8 of the Companies Act of 2013 significantly improve communities. The method of incorporating a business under Section 8 is particularly simple for encouraging more people to contribute to society and rewarding those who currently do so. It is quick, has several benefits, and is done by loose standards. You can quickly establish a Section 8 corporation as long as you fill out the proper procedures and have the necessary paperwork on hand.
eStartIndia will help you with Section 8 Company Registration from the comfort of your home.
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