Process of Incorporation of Section 8 Company

A Section 8 Company, as per the Companies Act, 2013, is a not-for-profit organization established for promoting charitable activities in fields like education, science, art, social welfare, and more. These companies enjoy special privileges and exemptions, but their primary objective is not to earn profits for their members. The incorporation of a Section 8 Company involves a step-by-step process, which we will explore in this comprehensive guide.

Step 1: Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN)

The first step is to obtain a Digital Signature Certificate (DSC) for all proposed directors. The DSC is essential for online filing of documents with the Ministry of Corporate Affairs (MCA). Simultaneously, the directors must also apply for Director Identification Number (DIN), which is a unique identification number allotted to individuals intending to become directors.

Step 2: Choose a Suitable Name for the Company

Selecting an appropriate name is crucial for the incorporation process. The name should reflect the organization's objectives and must not be similar to an existing company or trademark. The name must also comply with the naming guidelines specified by the MCA.

Step 3: Apply for Name Approval

After finalizing the name, apply for name approval through the RUN (Reserve Unique Name) service on the MCA portal. Ensure that all necessary documents and details are provided accurately during the name approval process.

Step 4: Drafting the Memorandum and Articles of Association

The Memorandum of Association (MOA) and Articles of Association (AOA) are vital documents that define the objectives, rules, and regulations of the Section 8 Company. These documents must be drafted carefully and in compliance with the Companies Act.

Step 5: Obtain License from Central Government

As a Section 8 Company, you need a license from the Central Government before incorporating. To obtain the license, submit Form INC-12 along with the required documents and the prescribed fee to the Registrar of Companies (ROC).

Step 6: File Incorporation Documents

Once the license is obtained, proceed with filing the incorporation documents. The following documents must be filed with the ROC:

1. Form INC-32 (SPICe - Simplified Proforma for Incorporating Company Electronically): This form combines the application for DIN, name reservation, and incorporation into a single form.

2. Form INC-33 (e-MOA): This is an electronic version of the MOA.

3. Form INC-34 (e-AOA): This is an electronic version of the AOA.

Ensure that all the documents are accurately filled and signed by the directors and subscribers.

Step 7: Pay the Requisite Fee

Pay the prescribed registration fee and stamp duty as applicable for the incorporation process. The fee amount depends on the authorized share capital of the company.

Step 8: Verification and Approval

The ROC will verify the documents submitted for incorporation. If all documents are found to be in order, the Registrar will issue a Certificate of Incorporation, mentioning the company's CIN (Corporate Identification Number).

Step 9: Apply for PAN and TAN

Once the Certificate of Incorporation is obtained, apply for Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) with the Income Tax Department.

Step 10: Commence Operations

After obtaining PAN and TAN, the Section 8 Company can commence its operations and undertake charitable activities as per its objectives.

Important Points to Note

1. A Section 8 Company must apply at least 15 days before commencing any charitable activities.

2. All income and profits generated by the Section 8 Company must be utilized for promoting its objectives, and no dividend can be distributed to its members.

Conclusion

Incorporating a Section 8 Company is a noble endeavor, aimed at promoting charitable activities and making a positive impact on society. Following the step-by-step process outlined in this guide will ensure a smooth and successful incorporation, allowing the organization to focus on its philanthropic goals and contribute meaningfully to the betterment of the community.