Section 8 Company Registration

When a company is registered as a Non-Profit Organization (NPO), it is referred to as section 8 company; the motto of this type of company is to promote business, commerce, arts, and craft, education, religion, environment protection, social welfare, sports research, etc. this section 8 company registration comes under, the companies act 2013. Section 8 company has the right to work anywhere in the country.

Advantages

Advantages of registering a section 8 company ?

• Capital

  Unlike all other companies, they do not require a prescribed minimum paid-up share capital.

• Limited Liability

  section eight company Members have limited liability. The liabilities of section 8 company cannot be unlimited.

• Tax Benefits

  Various tax benefits and compensations are given to this type of company as well as to the donors who are donating to Section 8 Company.

• No Payment of Stamp Duty

  Stamp duty has been exempted on the Section 8 Company registration as the payment is made only for the stamp duty applicable for registration.

• Legal Identity

  Section 8 Company has an individual legal entity as a private/public Company and also holds a distinct legal personality from its member.

• Transfer Of Ownership

  Members of Section 8 Company members have the right to transfer the company's ownership, and it is a too easy process.

• In section 8, there is more credibility than NGOs, societies, and trusts because the Central Government's license recognizes them.

Let's see who all can incorporate a section 8 company ?

• Section 8 Company Registration one individual should have the below-mentioned objectives.
• If only a company promotes craft, science, commerce, education, art, physical activities, knowledge, research, social welfare, protection of the environment can be a section 8 company.
• When the company is not willing to pay any dividends to its members

Registration Process

For Section 8 Company registration, the mandatory documents are

• Director Identification Number (DIN)
• Digital Signature Certificate
• Memorandum of Association
• Articles of Association
• Passport size Photographs
• Proof of Aadhar Card, Passport, and Voter ID.
• Details of Director
• Address Proof

Disadvantages

Disadvantages of section eight companies

Despite numerous merits, these companies there are few disadvantages as follows:

• People of the company cannot get any shares.
• Officers and directors don't get any benefits and allowances.
• Can only use the assets for furthering charitable aims and objectives.
• Section 8 can dissolve themselves either voluntarily

Registration process

Let us now see go through the registration process as it is not that difficult

A person can make an application to the Registrar of Companies using requisite forms to form a company with a charitable application under Section 8 of the Companies Act. If satisfied, the central Government can accept such an application upon any terms. The entire procedure is online, and an individual doesn't have to be present at their office.

As the process from the first step can be done online as the first step Section 8 companies' main requirement is a license by the Central Government. Let's see on what basis cancellation of license is made.

• The company violates provisions of Section 8;
• Condition of the license is violated;
• Violates its company objectives and public policy.
• The Government can even order the company to be wound up with another similar company under certain circumstances. The Government should hear the company before passing any such orders.