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Section 8 Company
Earlier known as section 25 Companies, section 8 Companies are those companies which are incorporated with the objective of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object and intends to apply its profits, if any, or other income in promoting such objectives and no amount shall be distributed as dividend among its members.
Features of Section 8 Companies:
- Members– A per provisions of the Companies Act 2013, minimum of 2 members are required to start a company.
- Number of directors– Minimum 2 directors are required to set up a company, out of which 1 shall be an Indian resident.
- Paid up capital– There is no minimum capital requirement for incorporating the section 8 Company.
- Name– It is not mandatory for section 8 companies to use the word private limited or limited after its name.
- Profits the Company: Profits of the company shall be utilized towards the objects of the Company and should not be distributed amongst the members as dividend.
Advantages of section 8 companies:
- No minimum capital requirement– A section 8 company is not liable to have any minimum capital to incorporate the Company.
- Perpetual succession– Company’s identity is different from its owner. Therefore death, insolvency, or bankruptcy of any of its members has no impact on company’s existence.
- Better reputation: Since a Company is required to get its accounts audited as per the provisions of the Companies Act, it drastically improves the trust of the clients and other stakeholders on the Company.
- Lower tax rates: Companies having turnover upto Rs 50 crores are taxable at the rate of 25% starting from the financial year starting April 1, 2017.
- Separate legal assistance: The private company has a separate legal existence from that of its owners. It can own property and sue and be sued.
Procedure for registration:
Checking the name availability of the Company and applying to ROC for obtaining the approval of the name.
Applying for the DIN and digital signatures of the Directors of the Company.
Drafting of the Memorandum and the Articles of association of the Company
Apply to MCA for section 8 licence for the Company and publishing a notice in newspapers regarding the same.
Filing/ E-filing of the all the relevant documents with the ROC and obtaining the Certificate of Incorporation of Company
Documents required:
- DSCs and DINs of the proposed directors;
- PAN of all the Directors;
- Identity proof of all the directors and members;
- Passport size photographs;
- Copy of the bank statement/ electricity bill/ telephone bill;
- NOC from the landlord, in case of rented premises;
- Copy of telephone bill/ electricity bill/ gas bill, etc as proof of place of business.
Precautions to be taken while keeping the name of the Company:
- There is specific exemption given to section 8 companies for allowing them to not use “Pvt Limited” or “Limited” at the end of their names.
- Proposed name should NOT be identical with another existing name of the Company.
- Certain words such as India, Prime Minister, President, etc shall not be used in the name of the Company.
- It is not necessary to reflect the object of Company in Name of the Company.
- Company can be incorporate with the abbreviated word of the name of the promoters.
- It is prohibited to use certain emblems and names in an improper way.
FAQ’s
1) What is the minimum capital required to incorporate the section 8 Company?
As per the provisions of the Companies Act 2013, there is no minimum capital requirement to establish section 8 company.
2) What are the minimum no of directors required to incorporate the section 8 company?
Minimum of 2 directors shall be required for section 8 companies.
3) What all objects can be undertaken by the section 8 company?
Section 8 company is incorporated for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any other similar object.
4) Does section 8 company need to comply with all the provisions of the Companies Act?
No, section 8 company does not need to comply with all the provisions of the Companies act. There are several exemptions given to such companies with regard to secretarial and other forms of compliances.
Other auxiliary services provided by us with regard to setting up of business:
- Obtaining DIN for the Directors;
- Obtaining DSC for the Directors;
- Opening of the bank account for the Company;
- Applying PAN and TAN of the Company;
- Registration under GST/ service tax/ VAT/ Excise/ PF/ ESI;
- Review and maintenance of records as required under GST/ service tax/ VAT/ Excise/ PF/ ESI;
- Applying for Import/ export code;
- Assisting the clients in getting loans from the bank;
- Book-keeping services;
- Filing of TDS/ GST/Service tax/ VAT/ Excise returns;
- Computation of income tax and filing of Income tax returns;
- Filing of other forms as required by MCA;
- Maintenance of statutory registers/ minutes of the meetings;
- Filing of annual returns with MCA;
- Providing internal audit services;