Information About Section 8 Company

Not every company is formed to earn profits by carrying out trade and commerce. Many have a charitable and non-profit objective as well. Entities to carry out charitable works is referred to as Section 8 company.

Benefits Enjoyed By Section 8 Company:

• Companies whether public or private need not carry “limited” or “private limited” behind their name.
• They enjoy the status of a limited company
• Various tax exemptions are applicable to a section 8
• No stamp duty is paid for incorporating a Section 8 companies
• The time limit to hold the first board meeting is 6 months and not 1 month as in the case of any other companies.
• These companies enjoy certain exemptions and privileges under various provisions of the Companies Act, 2013 under Notification No. GSR 466(E)E and GSR 584 dated 5th June 2015 and 13th June 2017 respectively issued by MCA (Ministry of Corporate Affairs).

Benefits of Section 8 Company

Distinct Identity

like Private Limited, Public Limited, or an LLP, a Section 8 company is also a legal entity. It has a legal identity of its own apart from its directors and shareholders as recognized under the law. The company can own properties, incur debts, lend loans, and also the company can be sued or can sue anyone in its name. Section 8 companies have a perpetual existence as well i.e.; the company is not affected by the death or departure of any of its members.

Liability is Limited

The privilege of limited liability for organization debts is one of the principal advantages of doing business under the corporate form of organization. The company has a separate identity from its members and directors this means the assets and liabilities are of the company and not of the member. The liability of the member/shareholder extends to the contribution to the capital of the company up to the nominal value of the shares held and not paid by them. In other words, a shareholder is liable to pay the balance, if any, due on the shares held by him, when called upon to pay and nothing more than that, even if the liabilities of the company exceed its assets.

Tax Benefits

Section 8 company enjoys numerous tax exemptions, specifically to the donors who are contributing to Section 8 Companies. It also enjoys an exemption in stamp duty payment at the time of incorporating a company. It can get registered under sections 80G and 12AA of the Income Tax Act, 1961.

Establishment of Education Institutions

Section 8 companies are allowed to start schools and colleges. In 2016 the Medical Council of India permitted medical colleges to be set up by companies (including Section 8 companies). The education sector is one of the major sectors in which schools are largely owned by Section 25 companies formed under the erstwhile Companies Act, 1956, or under Section 8 of the Act.

PROCEDURE FOR INCORPORATION OF SECTION 8 COMPANY

The Ministry of Corporate Affairs (MCA) has tried to simplify the process of the Incorporation of a Company by bringing many changes. The MCA has amended the Companies (Incorporation) Rules, 2014 with effect from February 23, 2020, and introduced the new Form SPICE+ for Registration of Companies.

SPICe was an e-form while, SPICe+ is an integrated Web form offering various other services except for incorporation by 3 Central Govt Ministries & Departments i.e., Ministry of Corporate Affairs, SPICe+ is part of numerous initiatives and obligations of the Government of India towards Ease of Doing Business (EODB).

SPICe+ is an integrated Web Form.  It has been divided into two parts viz.: Part A and Part B. Where Part A is for Name reservations for new companies while Part B offers various other services such as:

• Incorporation
• DIN allotment
• PAN
• TAN
• EPFO registration
• ESIC registration
• Profession Tax Registration (Maharashtra)
• Opening of Bank Account
• Allotment of GSTIN (if applied for)

The applicant may either submit Part A first for reserving the name and once name the is reserved then can go for Part B or can submit both Part A and Part B together. 

A. Filing PART A of SPICE+ Form

1. SPICE+ option available under MCA Services

2. When we click on the SPICE+ form the next screen will open

3. Create a User Id (If you do not have one) or Login using the current User ID and Password

4. After logging in select “New Application”.

5. When you click on New Application, the next page will open in which you have to fill in all the details mentioned below:

• Type of Company
• Class of Companies
• Category of Companies
• Sub-category of companies
• Main division (Most Important) of business activity of the Company
• Proposed names of the company

6. For first-level automatic scrutiny we have to click the ‘Auto Check’ of the proposed name following the rules governing the same. After the auto check, we will submit Part A for the reservation of the name or the procedure of incorporation of the company.

7. After PART A of SPICE+ gets approved you will receive Name Letter Approval in your mail.

8. After PART A of SPICE+ gets approved you will receive Name Letter Approval in your mail.

Filing of PART B of SPICE+

9. Fill in all the details in PART B of the SPICE+ form as required. And attach all the required documents for fulfilling the section 8 company requirements.

10. Once the form is complete, pre-scrutinize the form and submit it. With PART B of the SPICE+ form, we also need to file INC-9 and Agile Form.

11. After submission of all forms download all three forms and attach DSC and file as Linked Form

12. Once the SPICE+ and AGILE are approved, License No. and Certificate of Incorporation is granted and in COI, all details regarding CIN and Pan and Tan are provided.

Documents Required To Form A Section 8 Company

Digital Signature Certificate (DSC)	Photo PAN – Self attested Address Proof of the person– Aadhar No /Bank Statement (Latest Statement)/ Indian Passport – Self Attested Mobile Number Email-ID
Name Application	Two Proposed Names (use of word Foundation, Association, etc is mandatory for Section 8 Company) Main Object Clause
For SPICE+ Form	MOA AOA PAN of Subscribers to MOA (1st Directors of the company) ID Proof of the person - PAN Card/ Driving License/ Voter ID Card Address Proof of the person– Aadhar No. / Electricity Bill (Latest)/ Bank Statement (Latest Statement)/ Telephone Bill (Latest) Notarized Rent Agreement of the Registered Office No Objection Certificate from the Premises owner to use the premises Utility bill of the address, latest and not older than 2 Month Declaration under section INC-15 Declaration under section INC-14 Estimated / Projected Income and Expenditure Statement for the next 3 years in the Prescribed/given Format
For Agile Pro	Name of the Bank, where the company is willing to open the Bank Account Specimen Signature for EPFO NOC for the opening of a Bank Account Declaration of Authorised Signatory for GSTN

Points to remember –

• The size of the form should not exceed 6 MB as a form exceeding 6 MB size cannot be uploaded on the portal
• All five forms shall be uploaded in the sequence of SPICe + Part B, SPICe MOA, SPICe AOA, AGILE PRO & lastly INC-9.

When you upload all forms a Service Request Number is generated and using this Service Request Number, you can do the payment.

Applicants can check the Company status through the Service Request Number on the Ministry of Corporate Affairs portal.

Usually, the Ministry of corporate affairs takes a week to approve or send for resubmission. If the form is approved, then COI is received by the applicant.

What are the fees for Incorporation of Section 8 Company?

Sr. No.	Nominal Share Capital	Fees per document (INR)
1.	Less than INR. 1 Lakh	INR 200
2.	INR 1 lakh but less than INR 5 Lakhs	INR 300
3.	INR 5 lakh but less than INR 25 Lakhs	INR 400
4.	INR 25 lakh but less than INR 1 crore	INR 500
5.	INR 1 crore or more	INR 600

What is the minimum requirement of a Section 8 company?

• Minimum of two shareholders;
• Minimum of two Directors (Directors and shareholders/subscriber can be the same person);
• Of all the Directors, one Director must be an Indian resident;
• No requirement for Minimum Capital

What are the annual compliances a Section 8 Company is required to follow?

The annual compliances to be followed by Section 8 companies are just like any other company.

1. Minimum two board meetings during the year should be conducted

2. Audit is Mandatory

3. Annual Return to be filed every year

4. Income Tax Return attaching the tax audit report

5. Registration of 12AA, 80G etc.

Onlinexbrl is one of the best platform for section 8 company registration assistance, for more connect iwth us to get it done within few clicks.