After the license is issued by the ROC, we will submit all the documents along with the issued license to the ROC and will apply for the PAN and TAN simultaneously. Once Registrar of Companies duly verifies all the documents submitted, the approval is given, and the Certificate of Incorporation sent to you on your email id.
After receiving the certificate of incorporation, the condition of annual compliance shall get imposed on the section-8 company which the company has to do every year within the given time limit.
SHAREHOLDER: As compared to private limited and public limited company section-8 Company also have shareholders. The minimum limit of shareholders depends upon the category in which the company is registered. If the company is registered in the form of the private limited company, then the minimum shareholder shall be 2 and maximum shall be 200 but if the company registered under the category of the public limited company the minimum limit shall be 7 and maximum no limit. However, the shareholders of the company shall not take part and distribute the profit earned by the company.
DIRECTORS: The provisions for the appointment of the director are same as applicable under the private limited company and public limited company. If it is formed as a private limited company, then a minimum of two directors are required for the registration of the company. If it is registered in the form of a public limited company category, then a minimum of three directors is necessary at the time of registration. However, the maximum limit of the director of the company can be 15.
NAME: It is mandatory to use the word “private limited” or “limited” at the end of the name of the private limited company and public limited company, but the section-8 company has an exception for using such words. Section-8 Company can use the following words at the end of the name of the company:
- Foundation
- Association
- Society
- Chamber
- Federation
- Charities; and many other
For example Reliance Foundation, TATA Foundation, etc.
REGISTERED OFFICE: Every company needs a registered office at the time of incorporation of the company. The registered office is mandatory for every company as all the documents and notices shall be sent to that address, and this address shall be mentioned in every document, letterhead, deeds, all other documents of the company
CAPITAL: Now there is no requirement for having the minimum money in the company. The company can use any amount as its capital amount, but the paid-up share capital of the company shall be less than the authorized capital.
OBJECTIVE: Objective means the business activity of the company, and it shall not be for a profit-making purpose. The company will work only for the betterment, development and the protection of the society, nation, environment, living creatures. The main field of the organization can be society, sports, religion, art, commerce, protection of the environment, research and development and all other grounds which gives benefit to the community and the nation. The company cannot share the profit between the members of the company. All the income earned by the company shall be utilized only for the completion of the objective of the company.
- The company's main objective is to promote and develop the society. The company looks at the weaker part of the nation and cures it. Due to its aim, the company gains the trust of the general public due to which the value of brand name of the company increased.
- The company has non-profit motive objective due to which it enjoys the numerous tax exemption under Income Tax Act, 1961.
- Like the other companies, the section-8 company also enjoys the separate legal entity status. Moreover, the members and the directors of the company are the independent part of the company. Their individual status is different from the status of the company
- The company enjoys all the privileges like the limited company subject to limited liability obligation.
- Relaxation to use the word "private limited" and "limited" at the end of the name.
- There is no minimum capital requirement for the section-8 company, but it can be increased or decreased anytime during the life of the company.
- Easy to get the donation from the general public. The company works for social welfare due to which it receives the financial help from the people in the form of the donation.
A section-8 can run its function only for the welfare of society. The area in which a section-8 company can operate its functions are:
- Economic
- Social
- Sports
- Art
- Cultural
- Science
- Research & Development
- Environment
- Literature, etc. but only with not profit-making purpose.
Yes, the section-8 company can change its business activity but it should be for social welfare, but if the company changed its activity from non-profit making purpose to profit-making purpose then firstly it should have to change its status from section-8 company to either private limited or public limited
The minimum limit is either 2 if it is registered as a private limited company or 3 if it is registered as a public limited company.
There are some mandatory annual compliance for section 8 company that are required to be done every year like:-
- Open a bank account and deposit the paid-up capital
- Submit Form INC-20A within 180 days from its registration
- Appoint auditor within 30 days from its registration
- File annual report and financial statement after the completion of one financial year
- File Income Tax Return for the period of one financial year.
- Intimate the ROC regarding any changes in the company
Yes, any NRI or foreign citizen can incorporate a section-8 company in India and can be appointed as a director in the company but at least one director in the section-8 company shall be an India Citizen and must reside in India for the period of at least 182 days in a year.
No, the section-8 company cannot distribute its profit to its member it can only use it for its objective.
Yes, but before taking any foreign donation it should first have to take FCRA registration from the RBI.
Yes, if any time the central government thinks fit that the company has violated any condition for issuing the license or the company is using its profit for the distribution among the member or the motive become the profit-making then the central government can cancel or revoke its license issued.
- There is no time limit for the validity of the license and registration certificate of the section-8 company, it is valid until the company continues its function.