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Section 8 Company
Charitable Trusts can be set up in three different forms, namely
(a) register a trust under Indian Trust Act (register the trust at Sub-Registrar’s Office)
(b) Register it as a society under State Co-operative Societies Act or
(c) incorporate a company under Companies Act, 2013
The registration of a company under Companies Act, 2013 is popularly known as ‘Section 8’ company
We at Tirumalesh & Co have incorproated Section 8 Companies and obtained Income tax exemptions to them.
In case you need any assistance to set up a Section 8 Company, please write to info@catirumalesh.in
Who can apply for registration of a Section 8 company?
Any person or Number of associated persons intending to register a limited liability company for charitable objects as specified below can opt to apply for Company Registration or Company Formation under Section 8.
For what objects a Section 8 Company can be incorporated?
Promotion of commerce, art, science, sports, education, research, and social issues like social welfare, religion, charity, protection of the environment, or any other object is also included.
Can a Section 8 Company declare dividends to its members
Payment of Dividend to the members should be prohibited by the company.
What is the procedure for the incorporation of Section 8 company?
To incorporate a Section 8 Company an application shall be written to the Registrar of Companies in Form No INC 12, which shall be accompanied, inter alia, by the following documents:
- Draft of Memorandum of Association (MOA) and Articles of association (AOA) of the Company in the prescribed format (Form no. INC – 13) with the photographs of subscribers are affixed.
- A Declaration is to be attached in Form no. INC-14 on the stamp paper, duly notarized by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in practice, that the draft memorandum and articles of association have been drawn up in conformity with the provisions and rules made under Section 8 and all the requirements are fulfilled.
- An estimation of the annual income and expenditure of the company for the next three years, the sources of the income and the objects of the expenditure has to be specified.
- A declaration (in Form no. INC-15) on stamp paper duly notarized by each of the persons making the application.
- Form no. INC-9 form each subscriber and first directors, on appropriate stamp paper of the State and duly notarized.
Is it mandatory that the name of Section 8 company shall include words like Foundation, Forum, Association, Federation, etc.?
Yes. As per rule 8(7) of the Companies (Incorporation) Rules, 2014, for the Companies under Section 8 of the Act, the name shall include the foundation of the word, Forum, Association, Federation, and the like, etc.
an a company register under Section 8 be converted into any other company?
Yes, a Section 8 Company can be converted into any other company including OPC as prescribed under Section 8(4)(ii) read with Rules 21 and 22 of Companies (Incorporation) Rules, 2014. This is further subject to restrictions and compliances as per other applicable laws including the Income-tax Act, 1961.
Can a company be treated as Section 8 Company as well as a small company provided that the company has not exceeded the thresholds prescribed for small companies under section 2(85)?
No. As per proviso to section 2(85), section 2(85) does not apply to a Section 8 Company and accordingly, a Section 8 Company cannot be treated as a small company. Likewise, a small company on conversion to a Section 8 Company shall cease to be a small company.