FAQs on Section 8 Companies

FAQs on Section 8 Companies

Section 8 companies, classified as Not-for-Profit organizations, are formally registered under the Companies Act of 2013. Their distinctive purpose revolves around contributing to the overall welfare of society. These entities prioritize promoting altruistic activities throughout the country without the pursuit of financial gains.

This article aims to address frequently asked questions (FAQs) regarding Section 8 companies, providing insights to resolve any queries you may have related to the functioning and registration of these entities.

In the realm of company incorporation in India, a Section 8 company represents one of several formats available. While the overall process of incorporation shares similarities across various forms, those interested in the specific intricacies of Section 8 company registration can find comprehensive details on this page — Section 8 company registration as an NGO.

Who can apply for registration of a Section 8 company?

Individuals or a collective group sharing a common goal of serving society and pursuing welfare objectives have the option to register a Section 8 company. To meet the criteria set forth by the Government of India, a Section 8 company must adhere to the following stipulations:

  1. The objectives of a Section 8 company encompass the promotion of art and culture, trade, commerce, education, health, sanitation, charity, and religious activities, as well as the safeguarding of the environment and animal husbandry, among others.
  2. The primary intent of a Section 8 company is to channel its profits solely towards welfare purposes or in alignment with the aforementioned objectives.
  3. A crucial restriction imposed on Section 8 companies is their prohibition from distributing dividends to members and shareholders, emphasizing the organization’s commitment to its charitable and societal goals over financial returns to its stakeholders.
What is the process of section 8 company incorporation?

What is the process of section 8 company incorporation?

To initiate the registration process for a Section 8 company, individuals must submit an application to the Registrar of Companies using Form INC-12, as per Section 8 of the Companies Act, 2013. The application should be accompanied by the following documents:

  1. Memorandum of Association (MoA) and Articles of Association (AoA): A draft of the MoA and AoA must be submitted in the precise format mandated by the government.
  2. Declaration in Form INC-14: A notarized declaration in Form INC-14, authenticated by the relevant authorities, needs to be attached to the application.
  3. Estimate of Annual Expenditure and Income: Provide an estimate detailing the projected annual expenditure and the anticipated sources of income for the company.
  4. Declaration via Form INC-15: Include a declaration, executed on Form INC-15, which should bear the signature of the individual responsible for applying.
  5. Form INC-9: Form INC-9 is required to be submitted by each subscriber or director associated with the company as part of the comprehensive application process.
What are the rules for naming a Section 8 company?

What are the rules for naming a Section 8 company?

To name a section 8 company it is very important to take care of the terms that are included in the name of the company. As per company incorporation rules mentioned under Section 8 of the Companies Act, 2013. It is important to include terms like federation, council, foundation, forum, chambers, confederation, electoral trust, etc. and the omitted words are Pvt Ltd, Ltd, Public Ltd., etc.

Who is authorised to issue a license to a Section 8 company?

Who is authorised to issue a license to a Section 8 company?

The Central government has authorised the Registrar of the Companies(ROC) to issue licenses to Section 8 companies as per the Companies Act, 2013.

Can a one-person company(OPC) be incorporated as or converted to a Section 8 Company?

Can a one-person company(OPC) be incorporated as or converted to a Section 8 Company?

The absolute answer to this question is NO. As per Rule 3 of the Company incorporation, it is prohibited for an OPC to be incorporated as or converted to a Section 8 company. But an OPC can be converted to a Public/Private limited and then to a Section 8 company.

Can a Trust or a Cooperative society become a member of a Section 8 company?

Can a Trust or a Cooperative society become a member of a Section 8 company?

Yes, a Trust or a cooperative society can become a member of a Section 8 company as there is no restriction for them in the Companies Act, 2013.

Can a Section 8 company accept donations and grants from overseas and foreign organisations or individuals?

Can a Section 8 company accept donations and grants from overseas and foreign organisations or individuals?

To receive donations and grants from Non-resident Indians or foreign organisations, a Section 8 company has to comply with the rules and requirements mentioned under the Foreign Contribution and Regulation Act.

Can a Company registered under Section 8 be converted to some other company such as a Private Limited, OPC, etc?

Can a Company registered under Section 8 be converted to some other company such as a Private Limited, OPC, etc?

Yes, a Section 8 company can be converted to any other type of company such as Private limited, Public limited, one-person company, limited liability company, etc. This is further subject to certain rules and regulations.

Can a Trust registered under the Trust Act, be converted to a Section 8 company?

Can a Trust registered under the Trust Act, be converted to a Section 8 company?

As per the Companies Act, 2013, there is no restriction for the trust and societies to be converted to a Section 8 company. A trust can be converted to a Section 8 Company, subject to certain rules and regulations.

Are there any prescribed criteria concerning the number of directors in a Section 8 company?

Are there any prescribed criteria concerning the number of directors in a Section 8 company?

No, in the case of a Section 8 company, there is no criteria mentioned for maximum and minimum number of directors in a Section 8 company.

Whereas the minimum number of directors has to be 3 in the case of the public limited company 2 directors in the case of a Private limited company and a maximum of 15 directors.

How many Board meetings are to be held in a year in the case of a Section 8 company?

How many Board meetings are to be held in a year in the case of a Section 8 company?

Section 8 company must have at least one board meeting within every six months.