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Section 8 Company

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Overview

What is Section 8 Company?

According to the Companies Act 2013, it is defined under Section 8 that “Company has its objective of 
(a) promotion of commerce, art, science, sports, education, research, welfare, religion, charity, protection of environment or any such other object; 
(b) Intends to use its profits, if any, or other income in promoting its objects; and
(c) intends to stop the payment of any dividend to its members, the Central Government may, by license issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.”

What are the features of Section 8 company?

No Profit Motive

The companies registered under section 8, cannot distribute profits or assets to its members.

Voting Rights

The voting rights to the members of section 8 company are on the basis of the number of shares, almost like that of other companies.

No Minimum Capital

There is no minimum level of capital prescribed; hence a section 8 company is often incorporated with the capital as required by it.

One Resident Director

It is necessary that at least one director of the company must be resident in India. A person is known to be a resident when he stays in India for at least 182 days in the FY.


Advantages

  • Tax benefits
  • Separate legal entity
  • Ease in transferring of ownership /title
  • Zero stamp duty
  • Minimal share capital
  • Exemption from names

Disadvantages

  • No profit distribution
  • Zero benefits or perks
  • Limited objectives
  • Various rules and regulations to be followed
  • One person in this company cannot make his own decision without the consent of others.

What is the registration process of Section 8 Company?

DIGITAL SIGNATURE OF DIRECTOR

As the application for Company Incorporation is filed online, the method starts with the issuance of Digital Signatures of class two.

NAME APPROVAL OF COMPANY

The Company name should not be similar to an existing company and it must be unique.

LICENSE FOR SECTION 8 COMPANY

Before the central government, an application must be filed for grant of license to register a company without Limited in their name.

INCORPORATION, PAN AND TAN

An application is made to the ROC office for incorporation of section 8 company, and allotment of PAN and TAN.

What is the common registration process of Section 8 Company?

Shops & Establishment Registration

Every shop and the commercial establishment are required to obtain establishment registration with the Labour Department within 30 days of starting their business. It is mandatory for all states in India.

Trade License

No one should be adversely affected by health hazard and nuisance by the improper carrying of trade a License is necessary from the municipality within 30 days of starting the business.

Professional Tax Registration

Specific legislation have been passed by majority state governments to impose a tax on profession, employment of calling of any nature, however, and the fees for it is Rs. 2500 per annum.

Goods and Services Tax (GST)

GST Registration is mandatory for each business engaged in providing services or supply of products, where the turnover exceeds Rs. 40 Lac.

Food License / FSSAI Registration

During a business of producing, trading, storing or dealing in any manner of food items, then the state level FSSAI registration or Central License is mandatory based on the turnover.

Drug License

This location-based Drug License is granted by the State Government based on fulfilling certain norms and criteria. No entity can start or continue sale/trade of medicine without drug license.

Private Security Agency License

Private Security Agency may be a lucrative business with immense potential; however, it can be started or continued only after obtaining a license from the competent authority as designated by the state government.

Import Export Code (IEC)

IEC is a ten-digit pan based registration with the DGFT. IEC is a mandatory prerequisite to start a business of Import or Export in India. Only one IEC code can be issued against a pan.

FAQS

No, the Section 8 of Companies Act enjoys limited liability even without adding the words “Limited” or “Private Limited”. No, it does not affect their limited liability.

There are some special conditions to be complied under the Foreign Contribution and Regulation Act, 2010 to receive any contributions or donations from overseas/outside India from non-residents under Section 8 Company.

A person or an association of persons planning to register a limited liability company for objects specified below can opt to apply for registration of Section 8 Company. The following have to be proved to the satisfaction of the Central Government that according to the Companies Act: (a) “its objects includes promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; (b) the company after incorporation intends to apply its profits, if any, or other income in promoting such objects only; and (c) the company intends to prohibit the payment of any dividend to its members”.

No. Rule 20(1) of the Companies (Incorporation) Rules, 2014 on Section 8 Companies provides that only a limited company registered under this Act or under any previous company law can file an application to the Registrar for issuing license. Hence, a company having unlimited liabilities cannot be registered under Section 8 Company.

Yes, under Section 8 Companies it can be a holding company and can promote another company.

Yes, “Rule 20 of Companies (Incorporation) Rules, 2014 provides for the procedure for conversion of an entity into a Section 8 Company. Sub-rule (3) of rule 20 of Companies (Incorporation) Rules, 2014 provides that any entity which is desirous of being registered as section 8 Company, it, interalia, shall be required to publish a notice in Form No. INC- 26 within a week from the date of making the application to the Registrar in at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the proposed company is to be situated or is situated, and circulating in that district, and at least once in English language in an English newspaper circulating in that district. A copy of the notice, as published, shall be sent forthwith to the Registrar and also to be placed on the websites as may be notified by the Central Government.”

Yes, according to the provisions of Companies Act, 2013, a Partnership firm or an LLP can become the member of Section 8 Company. The provisions of respective Acts need to be complied with by the partnership firm or LLP as the case may be.

Section 2(42) of the Companies Act, 2013 defines the term “Foreign Company means any company or body corporate incorporated outside India which– (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner. Now since a Company or a body corporate incorporated outside India for doing not for profit activities, which has opened a branch/liaison office in India, cannot fall in definition of a foreign company as business activity is missing. Therefore, such company cannot be termed as foreign company. However, subject to compliance of FEMA regulations, it can open branch/liaison offices. Such not for profit companies or bodies corporate incorporated outside India can promote and register a Section 8 Company in India as a distinct entity.”

Stamp duty on memorandum & articles of Company or on any increase in share capital is governed by Indian Stamp Act, 1899 as adopted by respective state or stamp act of respective state, as the case may be. Also privileged rates for stamp duty on MOA/ AOA of Section 8 Companies or on increase in authorized share capital has been provided by some states. Summary of rate of stamp duty in various states is placed at Annexure – E.
Plan Start Rs. 29899 Only

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Special Corporate

List of Documents

  • Two Scanned Photographs of Promoters
  • PAN Card and Adhaar Card of Each Promoter
  • Identity Proof of each Promoter and Director (Voter ID / Driving License/ Passport)
  • Signed Declaration (s) from Promoter
  • NOC from the owner of the premises of Registered Office
  • Address Proof of Promoter ( (Bank Statement / Electricity, Mobile, Telephone Bill) not older than 2 months)
  • Proof of Registered Office

Pricing Plan

BASIC ₹29899
One Time

  • 3 Class 2 Digital Signatures & 2 DIN
  • 1 RUN Name Approval 
  • RD Approval
  • Incorporation Fee , Stamp Duty & Incorporation Certificate
  • 50+ Document Formats & Incorporation Kit
  • PAN, TAN & Bank Account Opening
  • GST Registration
  • GST E- Way Bill Software
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SILVER ₹49899
Yearly

  • INCLUSIVE OF BASIC PACKAGE
  • Commencement Certificate
  • Financial Statement Preparation
  • Annual & Director's Report
  • Board Resolution Preparation
  • MCA Annual Return Filing
  • Income Tax Return Filing
  • 1 Year Dedicated Compliance Manager Support
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GOLD ₹69899
Yearly

  • INCLUSIVE OF SILVER PACKAGE
  • 1 Year GST Return Filing (GSTR-3B or GSTR-1)
  • Book Keeping & Accounting upto 800 entries
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PLATINUM ₹89899
Yearly

  • INCLUSIVE OF GOLD PACKAGE
  • Book keeping & Accounting Software upto 2000 entries
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Disclaimer : 1) Class 2 digital signatures with 2 year validity on secure USB token. 2) Upto 3 name options can be given in 1 RUN name approval request. 3) Statutory Auditor fee is payable on actuals directly to the Independent Auditor appointed by the Board of Directors. Onfiling will only be responsible for accounting, preparation of financial statements and filing of returns on behalf of the Company.

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