Section 8 Companies Act 2013 & Its Advantages

Section 8 companies act 2013 is a company registered as a Non-Profit Organization (NPO). All Section 8 companies must adhere to section 8 Companies Act, 2013 compliance with the Ministry of Corporate Affairs (MCA). Section 8 company is a company having the main object of promoting arts, commerce, research, science, education, sports activity, charity, social welfare, religion, environment protection, or other similar kind of objectives.

These types of companies invest their profits in the operation of their main objectives. The company is not required to pay dividends to its members. The fundamental basis of Section 8 Company is for forming non-profit objects and it prohibits the payment of dividends to its members.

Eligibility of Forming Section 8 Companies Act 2013

An individual or group of individuals intending to be registered under Section 8 of the Companies Act, 2013 as a company are as follows–

• An Individual/HUF/ company is eligible to incorporate a Section 8 company in India.
• Two or more persons acting as shareholders or directors shall fulfil all the requirements and compliances of the Section 8 company.
• Its objects of promoting commerce, science, education, research, social welfare, religion, art, charity, or any other object.
• Having the intention to apply its profits, or other income in promoting its objects, and
• Having the intention to prohibit the payment of any dividend to its members.

You can download the section 8 Companies Act 2013 pdf from the website.

Define the Procedure of Section 8 Company Registration

The procedure for registration of Section 8 Company is discussed below:

1. Applying for name availability on MCA in Form RUN

2. Applying for Digital signatures of the First directors

3. Preparation of Memorandum of Association i.e., MOA, Articles of Association i.e., AOA, and other documents.

4. Filing of SPICe 32 Form

Attachments to SPICe 32 are as follows:

• Memorandum of Association in Form INC-13
• Articles of Association
• Declaration in Form INC-14 by CA/CS/CWA in practice.
• Declaration by an applicant - Form INC-15
• An estimated figure of annual income and expenditure in the future of the company for the coming three years
• Name approval letter received from CRC
• Consent and declaration by first directors in Form DIR-2 for section 8 Companies Act 2013.
• Self-declaration in Form INC-9 by first subscribers
• PAN card and Aadhar card of first subscribers and directors
• Proof of registered office such as NOC from the owner
• Latest utility bill like the electricity bill

Section 8 Companies must contain words like Foundation, Society, Association, Club, Charities, Academy, Organization, Federation, Institute, Development, and Many More.

Section 8 Companies have to mandatory attach the MOA and AOA as pdf attachments to SPICe-32. You can download the section 8 Companies Act, 2013 PDF from the website.

What are the Advantages of Section 8 Company?

Here are the advantages of Section 8 Company are as follows:

1. Distinct Identity:

The company is a legal entity formed under company law. Section 8 Companies Act 2013 is formed under the rules and regulations given under the act. The members don’t have any kind of personal liability to pay the debts of the company.

2. No-Minimum Capital Requirement:

Section 8 companies don’t require any amount of minimum share capital. It is licensed by the central government under section 8 of the companies act 2013.

3. Stamp Duty is Less:

When the company incorporation process is going on, there is less amount of stamp duty charged by the company.

4. There is No Suffix:

A Section 8 company can be incorporated without the word “Limited” or “Private Limited” at the end of its name. The name of the Companies Act, 2013 section 8 company shall include words like ‘Federation, Foundation, Association, Council’, etc.

5. Benefits in Tax:

Section 8 companies in India get a tax benefit if the registration is under the mentioned section of the Act. When the Section 8 Companies Act 2013 is registered under Section 12AA (tax exemption) of the Income-tax Act, then its profits shall be entirely exempted.

What is the Concept of the Right Issue?

Section 62 of Companies Act, 2013 provides that the right issue of shares is a formal invitation to the existing shareholders of the company to buy additional new shares; such shares are issued as per the proportion to existing shareholders of the company.

The pre-emptive right offer is made to the shareholders which are otherwise to be acceptable or not at all. All types of Companies can issue their shares through the right issue. The shares under the right issue can be issued by passing a Board resolution. Section 8 Companies Act 2013 is formed for not-for-profit objectives.

What do you Understand by Private Placement?

Section 42 of Companies Act, 2013 provides that a company can make a private placement to a selected group of people. It means offering its securities or inviting to subscribe its securities to a selected group of people other than by way of the public issue through a private placement offer letter.

Closure Now….

A Section 8 company can be registered for promoting arts, commerce, research, science, education, sports, charity, social welfare, environment protection, or any similar kind of goal. A section 8 company can work anywhere in India after the successful completion of the registration process.

For Formation of Section 8 Company, Connect Onlinexbrl for more query.