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A Section 8 Company in India is a non-profit organization established with the objective of promoting charitable activities, arts, science, sports, education, and other social causes. Unlike other companies, Section 8 Companies do not aim to earn profits and cannot distribute dividends to their members. Instead, their profits are used to further their objectives. This article provides a complete guide on the rules and procedures for registering a Section 8 Company in India.

Understanding Section 8 Company
A Section 8 Company is governed by the Companies Act, 2013 and is similar to a Trust or Society but enjoys more credibility and higher recognition, both nationally and internationally. It can be formed with or without share capital, and the members do not receive any dividend from the profits made by the company. The key benefit of registering a Section 8 Company is the tax exemptions and benefits it receives due to its non-profit nature.

Rules for Section 8 Company Registration
To register a Section 8 Company, certain rules must be followed:

1. Objective: The main objective should be charitable, promoting arts, education, sports, social welfare, research, or similar activities. The company cannot engage in profit-making activities unrelated to its objectives.
2. Members: A minimum of two individuals are required to register with a Section 8 Company, which can be registered as a private limited or public limited company. There is no upper limit on the number of members.
3. No Dividend Distribution: The company is prohibited from distributing any profits to its members; all profits must be reinvested into the company to promote its objectives.
4. Name: The company’s name should not include words like “Private Limited” or “Limited,” but must include “Foundation,” “Forum,” “Association,” etc., reflecting its charitable nature.
5. Compliance: The company must adhere to the rules laid down by the Companies Act, 2013, and maintain proper books of accounts, file annual returns, and comply with other statutory requirements.

Procedure for Section 8 Company Registration
Registering a Section 8 Company involves several steps, outlined below:

Step 1: Obtain Digital Signature Certificate (DSC)
The first step is to obtain DSCs for all proposed directors. The DSC is required for digitally signing the online application forms. It can be obtained from any authorized certifying agency.

Step 2: Apply for Director Identification Number (DIN)
Each proposed director must have a DIN, which can be applied for through the Ministry of Corporate Affairs (MCA) portal using the SPICe+ form. If the directors already have DINs, this step can be skipped.

Step 3: Name Reservation
Apply for the reservation of the company’s name through the RUN (Reserve Unique Name) service on the MCA portal. Ensure that the name reflects the charitable nature of the company. It’s advisable to provide alternative names in case the first choice is unavailable. The name should not be identical or similar to existing companies or trademarks.

Step 4: Draft the Memorandum and Articles of Association
Prepare the Memorandum of Association (MOA) and Articles of Association (AOA) outlining the company’s objectives and the rules governing its operations. Ensure these documents align with the provisions for Section 8 Companies, emphasizing the non-profit nature and charitable objectives.

Step 5: File Form SPICe+ (INC-32)
The next step is to file the SPICe+ form (INC-32) for company registration. This integrated form includes the application for incorporation, DIN allotment, PAN, TAN, and GST registration. Attach the MOA, AOA, and other required documents, such as the declaration by professionals (INC-14) and declarations by directors (INC-15).

Step 6: Obtain License under Section 8
After submitting the SPICe+ form, the Registrar of Companies (ROC) will forward the application to the Regional Director for approval. If the application satisfies the requirements, the Regional Director will issue a license under Section 8. This license allows the company to operate as a Section 8 Company and is a mandatory step before the company can be incorporated.

Step 7: Certificate of Incorporation
Upon obtaining the license, the ROC will issue a Certificate of Incorporation along with a unique Corporate Identification Number (CIN). This certificate confirms that the company is legally registered and can commence its operations.

Post-Registration Compliance
Once registered, a Section 8 Company must comply with ongoing statutory requirements, including:

• Annual Filing: Filing of annual returns and financial statements with the ROC.
• Accounting and Audit: Maintaining proper books of accounts and conducting annual audits.
• Income Tax Compliance: Filing of income tax returns and adhering to applicable tax provisions, including availing of exemptions under Sections 11 and 12 of the Income Tax Act.

Conclusion
Registering a Section 8 Company provides a structured and recognized means of contributing to social causes. With various benefits, including tax exemptions and enhanced credibility, Section 8 Companies are an ideal choice for individuals and organizations committed to philanthropy. By following the outlined rules and procedures, you can ensure a smooth registration process and focus on driving positive change through your charitable activities.