NEED OF“NGOs” IN FAST PACED WORLD
Feeding a hungry street dog, helping people in disasters, contribution to PM Fund, donationto orphanages, a small tuition given to poor kids in slum areas(and many similar activities) gives us a sense of satisfaction and boosts our self-esteem along with a top up feeling of deep gratitude because it makes us feel serene and provides us blissfulness about ourselves, don’twe?
If such small acts of kindness can giveso much mental peace to us, then think about those huge philanthropists or social workers of all the time who wakes up every day with a vision of feeding thousands and lacs of people, providing safe shelter to the needy, organising medical camps and several other charity activities.
CORPORATES: BIGGEST PHILANTHROPISTS
The act of charity or social work is not limited to only wealthy sections of our society or foundations promoted by Temples or Khalsa group. Now, from renowned corporate houses of the country to the marginal household,each one of us can contribute to the society in the forms of trusts, societies,and most importantly Section 8 Companiesspecifically registered for the act of NGO.
The introduction of mandatory Corporate Social Responsibility (CSR) obligation under Section 135 of Companies Act, 2013 has somehow given it a boost to some extent, but it will be unfair to deny the huge contributions of the noted corporate personalities much beforeit.Tata Foundation, Gates Foundation, Infosys Foundation, Reliance research Institute, they all are registered as Section 8 Companiesand mentioned here for the sake of naming a few.
TYPES OF NOT-FOR-PROFIT ORGANISATIONS (NPO/NGO)
Although in India, NGOs can be formed in various forms and structures such as trusts, societies, section 8 companies (erstwhile section 25 company).
In this article, we will specifically talk about Section 8 company registration and its documentation requirements.
SECTION 8 COMPANYREGISTRATION: MEANING
Section 8 Company means:
- A Company which is registered under Section 8 of Companies, Act 2013 for the purpose of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or anysuch other objects;
- Which do not intend to utilise its Profit to any purpose then the promotion of its objects; and
- Prohibits payment of dividend to its MOA.
ADVANTAGES OF SECTION 8 COMPANY REGISTRATION
- No Stamp Duty: As Section 8 companies are registered in India for the sake of charity or other social cause.Therefore, they are exempt from payment of Stamp Duty on their Authorised Share Capital.
- Limited Liability: Section 8 companies are registered as Limited Liability Companies; therefore, they provide protection to the personal assets of the Members in case funds become insufficient to repay debts of the company.
- No need to Add Limited/ Private Limited to its name: Section 8 companies are granted License by Central Government on an application filed during the time of its incorporation and are not required to end their names with word Limited or private limited even if they are registered as Private Limited Company or Public Limited Company.
Instead, section 8 companiesare allowed to use words such as foundation, council, institute, forum, federation etc after its name to clearly being identified as charitable organisations.
- Eligible to work as CSR implementation agency: Section 8 Company which is having a track record of at least 3 years in its field or Section 8 Company registered under section 12Aor 80G of Income Tax, can register itself as Implementation Agency for the purpose of CSR obligation by filing form CSR-1 and can get funds for charitable purposes.
- Partnership firm can be its Member:In the entire company Law,a Partnership Firm is not allowed to become Member of any company since it is not a body corporate and do not possess identity distinct from its partners. However, Partnership Firm is allowed to become the Member of a Section 8 Company.
- Various Tax Exemptions: Being an organisation formed for social cause it is entitled to get various tax exemption under Income Tax, Act. Its members canclaim tax deduction on the amount of their contribution in that company.Also,Section 8 Company is completely tax free if it obtains registration under section 80G and 12A of Income Tax Act.
- Credibility: Being licensed by Central Government it has more credibility than any other form of charitable organisation, therefore it has excess to funds more easily than any other form.
FEATURES OF SECTION 8 COMPANY INCORPORATION
- It is a separate legal entity licensed under Section 8 of companies Act, 2013, therefore it is more organised form of charitable organisation.
- It is formed with the object of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
- It cannot be formed as OPC. (ProhibitionUnder Section3)
- It can be formed as a limited liability company (Unlimited liability company not allowed).
- It is licensed by Central Government subject to application made during incorporation.
- Directors are prohibited to draw any remuneration from Section 8 Company.
- Objects of the company can be altered only with approval of Central Government.
SECTION 8 COMPANY REGISTRATION ONLINE
With the introduction of Companies Act, 2013 and MCA21 system the registration of companies including Section 8 companiesis made online by filing SPICe plus (e-form- INC-32). Now, It is a matter of 7-10 daysthat you get Certificate of Incorporation (COI) in your hand from the date of application for incorporation.
In contrast, earlier physical submission of application along with scanned documents used to take place due to which it used to take 3-6 months to incorporate a company.
SECTION 8 COMPANY REGISTRATION FORMS:
- Name Reservation application- SPICe Part A
- Incorporation and license application- SPICe PartB
- AGILE-PRO-S
- INC-9
Note: SPICe MOA, SPICe AOA are not applicable to Section 8 company registration, MOA and AOA are to be submitted in the form of scanned copy of printed and signed INC-13 and INC-14 respectively as attachments to SPICe part-B.
SECTION 8 COMPANY REGISTRATION DOCUMENTS
- Passport size photographs of all first Directors/subscribers to MOA
- ID proof of subscribers and first directors (self-attested Aadhar card and PAN card)
- Permanent address proof of Subscribers and directors (Voter ID, passport, driving license
- Present address proof of subscribers and directors (Bank statement or utility bill not older than 2 months)
- Business activity and NIC code details
- Authorised and paid-up capital details
- Registered office proof (Rent Agreement/ NOC along with utility bill)
ATTACHMENTS TO SECTION 8 COMPANY REGISTRATION FORMS
- Memorandum of Association in form INC-13
- Articles of Association in form INC-14
- Declaration in form INC-14 by Advocate/CA/CS/CMA in practice to the effect that all the conditions given under section 8 have been complied with and that the MOA and AOA have been drawn up to conformity of Section 8.
- Declaration in form INC-15 by each Applicant to incorporation
- Consent by First Directors in form DIR-2
- Declaration by First Directors regarding Non- Disqualification in Section 164 in form DIR-3
- An estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure
- Self Declaration by First Directors and Subscribers in form INC-9
- ID and address proofs of first directors and subscribers
- Registered office address proof
Thank you for giving your valuable time, if you have any queries or need consultation regarding Section 8 Company Registration,then please contact our dedicated team at Compliance Calendar LLP at info@ccoffice.in or 9988424211 and we will be happy to assist you.
