A Section 8 Company is a non-profit organization that is registered under the Companies Act, 2013 (previously under the Companies Act, 1956) for promoting charitable or not-for-profit objectives. These companies are registered as a legal entity with the Registrar of Companies (ROC) under the Ministry of Corporate Affairs (MCA) in India.

Section 8 Companies are also known as Non-Governmental Organizations (NGOs) or Not-for-Profit Organizations (NPOs) and have certain benefits and exemptions that are not available to regular for-profit companies. For example, Section 8 Companies are exempt from paying dividend taxes, and their income is tax-free if it is used for charitable purposes.

To register a Section 8 Company, the following criteria must be met:

• The company must be incorporated with at least two members (individuals or companies).
• The company must have a registered office in India.
• The company must have a Memorandum of Association (MOA) that outlines the objectives of the company.
• The company must have Articles of Association (AOA) that defines the rules and regulations for its internal management.

Additionally, the company must obtain a license from the Central Government before incorporating under Section 8. The license is issued by the Registrar of Companies (ROC) after verifying that the company's objectives are for promoting charitable or not-for-profit purposes.

Once the Section 8 Company is registered, it must comply with the applicable provisions of the Companies Act, 2013 and the rules and regulations specified by the ROC. It must also maintain proper books of accounts and file annual returns with the ROC to maintain its status as a non-profit organization.

To register a Section 8 Company in India, the following requirements must be met:

1. Minimum Members: A Section 8 Company must be incorporated with at least two members (individuals or companies). However, there is no maximum limit on the number of members that can be associated with the company.
2. Directors: A minimum of two directors are required to register a Section 8 Company. The directors must have a valid Director Identification Number (DIN) and Digital Signature Certificate (DSC).
3. Registered Office: The company must have a registered office in India, which can be a commercial or residential address. The registered office must be capable of receiving and acknowledging all official communications and notices.
4. Objectives: The main objective of the Section 8 Company must be to promote charitable or not-for-profit purposes. The company must prepare a Memorandum of Association (MOA) and Articles of Association (AOA) that clearly outlines the objectives of the company.
5. Name Approval: The company must select a unique name for itself that is not identical or similar to any other registered company or trademark. The name must also comply with the naming guidelines specified by the Ministry of Corporate Affairs (MCA).
6. License from Central Government: Before incorporating under Section 8, the company must obtain a license from the Central Government. The application for the license must be made in the prescribed form along with the required documents and fees.
7. Compliance: Once the company is registered, it must comply with the provisions of the Companies Act, 2013, and the rules and regulations specified by the Registrar of Companies (ROC). The company must also maintain proper books of accounts and file annual returns with the ROC to maintain its status as a non-profit organization.

FinAccy Business Solutions LLP provides assistance in registering a Section 8 Company and ensuring that all the requirements are met. We also offer professional advice and guidance throughout the registration process to ensure a smooth and successful registration.

Compliance for section 8 companies in India

1. Appointment of the auditor

The section 8 Companies are obligated by law to appoint an auditor to handle the Company’s yearly financial reports. Section 139 of the Companies Act, 2013 mandates that each company must submit Form ADT-1 to the MCA informing it about the appointment of the auditor and the details of the same. The auditor will be hired for up to five financial years and audit the company’s books of accounts and financial statements annually.

The auditor shall be appointed within 15 days from the date of the Annual General Meeting (AGM). The fine for delay in filing for this form depends on the days of delay. For example, if delay up to 30 days then the fine is 2 times the normal fees; if more than 30 days and less than 60 days, then the fine is 4 times the normal fees and so on.

2. Maintaining of statutory registers

The company is obligated under section 8 of the Companies Act, 2013 to maintain the register in which the details of loans taken by the company, director’s details, change in director, charges created, investments etc.

3. Conduct meetings

The section 8 companies are obligated by law to hold an annual general meeting twice a year and also to conduct other statutory meetings.

4. Report by board of directors

A document, which consists of the information about the company and its compliance attached with a set of financials, corporate social responsibilities, accounting and other annexures, is referred to as the director’s report. It is compulsory for the directors of the company to make this report as per the provisions of the Companies Act, 2013. This report must be filed as an attachment to the AOC-4 Form.

5. Preparing the company’s financial statements

The company must prepare previous year financial statements, which consist of a balance sheet, profit and loss statement, cash flow statement, and other financial documents that must be filed with the Registrar of Companies (ROC) and should be audited by the auditor.

6. Filing of financial statements

The AOC-4 Form must be submitted within 30 days of the AGM date. Failure to file it will result in a penalty of Rs. 100 per day.

7. Filing of annual returns

The MGT-7 Form must be submitted within 60 days of the AGM date. Failure to file it will result in a penalty of Rs. 100 per day.

8. Filing of Income Tax Return

Section 8 Companies must file their income tax reports by September 30th of every year. The purpose of filing income tax returns is to provide a summary of the company’s total income.