Section 8 Company

The Company is a Section 8 Company within the meaning of Section 8 of the Companies Act, 2013 where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a company:

• has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
• intends to apply its profits, if any, or other income in promoting its objects.
• intends to prohibit the payment of any dividend to its members.

Section 8 Company is a voluntary association of person formed for promotional activities; an alternative to establish a Trust and Society. Section 8 Companies are formed as Public or Private Company having a limited liability. It can be formed with a minimum capital of 1 Lac if intends to form it as a Private Limited Company and 5 Lakhs if intends to form it as a Public Limited Company. The minimum member is 2 if forming it as a Private Limited Company and 7 if forming it as a public Limited Company. The minimum director is 2 if forming it as a Private Limited Company and 3 if forming it as a Public Limited Company.
Section 8 Companies can be formed only after obtaining the necessary license from the Central Government, which imposes certain terms and conditions while granting the approval. In case the company fails to comply with the terms and condition at any point of time, the license can be cancelled.
Section 8 Companies are not required to add the suffix Limited or Private Limited at the end of their name. Due to their nature of business, the Government of India has relaxed the application of various provisions of the Companies Act on such companies.

Advantages of Section 8 Companies

• Publication of Name

A section 8 company is not required to mention its name and address, as applicable to all other companies.

• Time and Place of AGM

Section 8 company is free to determine the date, place and time of its AGM according to their convenience and feasibility. The only condition is that the time, place and date of such meeting should have been pre determined by the Board of Directors in accordance with directions of the company if any.

• Notice of AGM

Section 8 companies have been given some relief by allowing them to hold an AGM after giving a notice of 4 days length instead of 21 days.

• Maintaining of Books of Accounts

Section 8 company required to maintain books of account relating to a period of only four years instead of eight years immediately preceding the current year.

• Increase in Number of Directors

Section 8 companies are free to increase the number of its directors without seeking approval of central government whereas as a public company is not allowed to increase the number of its directors without the approval of Central Government provided.

• Board Meetings

Section 8 companies are required to hold meetings of Board of Directors/Executive Committee/Governing Committee only once in every six months.

• Quorum for Meetings

The required quorum for a board meeting is one/third of its total strength which is arrived at after deducting the number of interested directors from the total number of directors on the Board or at least two whichever is higher. But section 8 company is exempt from this to the extent that the required quorum for any board meeting is eight members or one/fourth of its total strength whichever is less, provided it should not be less than two members in any case.

• Exercise of certain Powers

Section 8 companies are allowed to decide following three matters by passing a resolution by circulation instead of at meetings:

1. power to borrow moneys other than on debentures
2. power to invest funds of the company
3. power to make loans.

The remaining powers – power to make calls on shareholders in respect of money unpaid on their shares, power to authorize buy back of shares and power to issue debentures, can be exercised only by passing of resolutions at duly conducted meeting of Board of Directors of section 8 company.

• Maintenance of Register of Directors

Section 8 company does not required to notify changes among its directors, etc to the Registrar. They are only required to maintain Registers of their Directors, Managing Directors, Managers and Secretary in prescribed format containing specified particulars and updating the register by making changes in it as when it occurs.

• Qualification for Secretary-ship

A Section 8 company is exempt from the provision of section2 (45) to the extent that the rules regarding the qualification of a Secretary do not apply to them and are free to appoint any person as its Secretary whom it feels fit and proper for the same.

• Applicability of CARO

Companies Auditor’s Report Order 2003(CARO) is not applicable to section 8 companies.

• Stamping of Memorandum and Articles

The Articles and Memorandum of a Section 8 Company are not required to be stamped in accordance with the Indian Stamp Act, 1899.

• Easy Transferable Ownership

The shares and other interests of any member in the Section 8 Company shall be a movable property and can be transferable in the manner provided by the Articles, which is otherwise not easily possible in other business forms. Therefore, it is easier to become or leave the membership of the company or otherwise it is easier to transfer the ownership.

Drawbacks of Section 8 Companies

Though a Section 8 Company has many advantages and enjoys many privileges yet there are some statutory obligations which are required to be complied with and taken care of by such companies.

• Utilization of Profit/ Surplus

A Section 8 Company has to ensure that its profits and all other incomes are utilized only for the purpose of promoting its objects and not for any other purpose.

• Distribution of Profit/ Surplus

It should also ensure that its profits are not distributed as dividend among its members.

• Alteration of Object Clause

Section 8 Company cannot alter its objects clause in its Memorandum without seeking the written approval of central government.

• Government Conditions to be Complied

If the Central Government has imposed some conditions and regulations upon the company for granting a license under section 8 then such a company is bound by such conditions and has to ensure adequate compliance with them. These are required to be included in the Articles or/and memorandum of the company as may be directed by the government.

• Income Tax Liability

Section 8 Company is regarded as a ‘company’ within the meaning of the Income Tax Act, 1961 and as such its income is taxable according to the applicable rates similar to those applying to other companies.

• Compliance to License

If an existing company obtains a license under section 8, it has to ensure that its objects are confined to those mentioned in section 8 itself and if not make proper alteration to its memorandum and articles.

• Long Closing Proceedings

It is generally not easy to close the Section 8 Company as compared to other forms of business, the procedure to close is long and involves compliance of various formalities, at times it takes 1-2 years to completely wind-up the company. Moreover in certain cases, it is necessary to take the permission of the High Court to close the Company.

• Revocation of License

The Central Government after giving reasonable opportunity of hearing can revoke the license by passing a speaking order.

• Winding up of the company

It can also be wound up if the objects for which it had been established have been fully achieved. The surplus assets if any may be given to a similar charitable cause.

Know About Digital Signature

What is a Digital Signature Certificate (DSC)?
The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance program are required to be filed with the use of Digital Signatures by the person authorized to sign the documents.
Pay Attention
You can use only the valid Digital Signatures issued to you. However it is not lawful to use digital signature of someone else by way of impersonation.
Certification Agencies
Office of the Controller of Certification Agencies (CCA) under the provisions of IT Act, 2000 appoints Certification Agencies. A total of seven Certification Agencies have been authorized by the CCA to issue the Digital Signature Certificates (DSCs). The details of these Certification Agencies are available on the portal of the Ministry of Corporate affairs.
Class of DSC
The Ministry of Corporate Affairs has stipulated a Class-II or above category signing certificate for e-filings under MCA21. A person who already has the specified DSC for any other application can use the same for filings under MCA21 and is not required to obtain a fresh DSC.
Required documents for getting DSC:

• Specified Form filled as per given guidelines
• ID proof of the applicant (Copy of the PAN card should be attested by the Gazetted officer/Bank manager/Post master).
• Address proof (Passport/Aadhar card/Driving License/Voter Id/Latest Utility Bill like Electricity bill, Telephone bill, Water bill, Gas bill, etc, Property Tax receipt). This needs to be attested by a Gazetted officer/ Bank manager/ Post master.
• Passport size photo(3.5 cm X 2.5 cm)

Getting DIN

The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006. As such, all the existing and intending directors have to obtain DIN within the prescribed time-frame as notified.
DIN is a unique identification number allotted to an individual who is an existing director of the company or intends to be appointed as director of a company. DIN is an 8 digit number. For example: 02165789.This is allotted by Central Government (office of regional director), Ministry of Corporate Affairs. A private company must have at least 2 directors.
Required documents/information’s for Allotment of DIN

• Self attested* copy of the PAN Card
• Self attested* identity proof of the proposed directors (like Voter ID Card/ Valid Driving License/ Valid Passport/ Aadhar Card etc).
• Self attested* Address proof of the proposed directors (like Latest Bank Statement/ Telephone or Mobile Bill/ Electricity Bill etc).
• Passport size color & clear photograph (3.5 cm X 2.5 cm)
• An specified Affidavit by the individual (Declaration by the individual and self attested*)
• Educational Qualification
• Current Occupation
• Valid Email Id and Mobile Number

*Signature should be same as in PAN card.
Before you fill-in applications for DIN please remember following common causes of REJECTIONS

• Applicant’s name and father’s name mentioned in abbreviated form: The Name should be expanded even if the ID proof contains the name in abbreviated form.
• Mismatch in the applicant’s name and father’s name in DIN form with the ID (Identity) proof enclosed: Any mismatch in name, including spelling mistake, may lead to rejection of application. Minor spelling deviations in the father’s name may be accepted, if such deviations do not materially impact the name.
• Prefixes like Mr/ Ms/ Kumari/ Shri/ etc. used in the applicant’s name.
• Residence proof(s) like Bank Statements, Electricity Bill, Telephone Bill, Utility bills, etc, submitted are older than 2 months of submitting the application for verification such documents are in the name of some other person, for example father or spouse.
• The supporting documents are not duly attested by the proposed directors.
• Passport/Driving License/Identity proofs/etc attached is expired: Only such documents which are currently valid should be attached.

The signatures are not same as signature in the PAN card.

Name Search and application for Name Availability

Next step in the formation of a company is the approval of the name by the Registrar of Companies (ROC) in the State/Union Territory in which the company will maintain its Registered Office. This approval is provided subject to certain conditions: for instance,

• There should not be an existing company by the same name.
• The first word contain a noun and the second word must relate to the main object of the proposed company
• The last words in the name are required to be ‘Ltd.’
• The application should mention at least two suitable names to maximum six names of the proposed company, in order of preference

Once company name is approved, it is valid for a period of sixty days from the date of application, within that time Memorandum of Association (MOA) and Articles of Association (AOA) together with miscellaneous documents should be filed. If one is unable to do so, an application may be made for renewal of name by paying additional fees.
Information required for seeking Name Approval

• Proposed name of the company and alternative names (2 to 6 names)
• Significance of the first word of the proposed name that makes it easier to get a desired name.
• Names of the proposed promoter/shareholder
• Authorized share capital
• Main objects of the company in brief (200 alphabetic words)
• Address proof for registered office of the proposed company
• Address for the nearest police station of proposed registered address of the company.
• NOC, if the promoter is carrying on any Partnership firm, sole proprietary or unregistered entity in the name as applied.
• NOC from the person if the proposed name(s) contain(s) name of any person other than promoter(s) or their close blood relatives.
• If the proposed name(s) include(s) the name of relatives then the proof of relationship is also required

Incorporation Process

1. Application to Regional Director

After the availability of name is confirmed, an application is made in E-Form RD 1, to the regional director of the company law board for granting license under this section. The application must include copies of the memorandum and articles of association of the proposed company, as well as a number of other documents, including a statement of assets and a brief description of the work proposed to be done upon registration.

• In Case of New Company

The following documents are to be attached in Form RD 1:

1. Memorandum of association (MOA duly attested by all the promoters)
2. Articles of association (AOA duly attested by all the promoters)
3.  Declaration as per rule 19 of the Companies (Incorporation) rules, 2014
4. Details application in Form INC-12
5. Statement of brief description of the work, if already done by the association and work proposed to be done
6. Statement of the grounds on which application is made
7.  Other necessary attachments as per rules 19 of the Companies (Incorporation) rules, 2014

• In Case of Existing Company

The following documents are to be attached in Form RD 1:

1. Detailed application in Form INC-12
2.  Assets and liability statement as per rule 20 of the Companies (Incorporation) rules, 2014
3.  Last two years’ accounts, balance sheet and report on working of the association as submitted to the members of the association
4. Statement of brief description of the work, if already done by the association and work proposed to be done
5. Other necessary attachments as INC-12

After obtaining license number, applicant can precede further to incorporate a company.

1. Form INC 7

The following information/documents required in INC 7:

• Finalized MOA/ AOA containing subscription sheets
• Affidavit for non acceptance of public deposit from all the promoters/ directors
• PAN card, address proof, identity proof of all the promoters
• INC 8, 9 &10 in specified format
• DIR 2  consent of director; duly digitally signed by promoter/ director

1. Form INC 22

This is a form to be filed by the company informing the ROC the address of registered office of the proposed company duly digitally signed by one of the director along with a professional.
The following information/documents required in Form INC 22:

• If property is owned by the proposed director, then;
  • Registered proof in the name of the director like latest Electricity Bill, Telephone bill, Gas bill
  • NOC from the proposed director to use the premises

• If the property is owned by other than proposed director, then;
  • Rent agreement between the land lord and proposed company through its proposed directors
  • Registered address proof in the name of the landlord like latest Electricity Bill, Telephone bill, Gas bill
  • NOC from the landlord to use the premises

• The name and address of the nearest police station of the premises where the company is going to be incorporated

1. Form DIR 12

This form states the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and that it is digitally signed by one of the proposed directors along with the professional.
The following information/documents required in Form DIR 12:

• Appointment Letter
• INC 9 and DIR 2 in specified format: Detail of appointment of board of directors digitally signed by one of the proposed directors along with the professional

1. After obtaining the details of Form INC7, INC22 and DIR12, these forms are uploaded on the MCA portal with the respective fees along with the stamp duty of the respective state.

1. After this, incorporation certificate having CIN (corporate identification number) like U 72900 RJ 2012 PTC 039206 will be obtained.

1. Form INC 21

This is a form used for obtaining approval for commencement of business from the ROC.
The following information/documents required in Form INC 21:

1. Board Resolution to subscribe the share capital of the company
2. Proof of payment of the stamp duty in the state in which the company is registered
3. INC 10 in specified format; duly digitally signed by promoter/ director.

1. The certificate of incorporation along with the approval of commencement of business will be required while opening the current bank account in company name.

• Specified Form filled as per given guidelines
• ID proof of the applicant (Copy of the PAN card should be attested by the Gazetted officer/Bank manager/Post master).
• Address proof (Passport/Aadhar card/Driving License/Voter Id/Latest Utility Bill like Electricity bill, Telephone bill, Water bill, Gas bill, etc, Property Tax receipt). This needs to be attested by a Gazetted officer/ Bank manager/ Post master.
• Passport size photo(3.5 cm X 2.5 cm)

Documents/Information Required During Process

Following documents/ forms need to be submitted along with requisite fee which is based on the amount of authorized capital as under:

1.	Form INC 1	Availability of Name for a New Company.
2.	Form INC 7	Application or declaration for incorporation of a company along with MOA & AOA, PAN card, Identity proof, address proof and affidavit for non acceptance of deposit by all the promoters/directors.
3.	Form INC 22	This is a form to be filed by one of the directors of the company informing the ROC the address of registered office of the proposed company.
4.	Form DIR 2	This is a consent obtained from all the proposed directors of the proposed company to act as directors of the proposed company.
5.	Form DIR 12	This is a form stating the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors.
6.	Form INC 21	Declaration prior to the commencement of business.
7.	Form INC 10	Form for verification of signature of subscribers.
8.	Form INC 9	Declaration by the subscribers for not been convicted of any offence in connection with the promotion, formation or management of any company during the preceding five years.
9.	Form INC 8	Declaration by the professional engaged in the incorporation process.
10.	Form RD 1	To obtain a license for section 8 company.

DOCUMENTS / FORMS REQUIRED AFTER INCORPORATION

Form Name	Event for which form is required to submit	Due date of filing	Whether fixed rate of additional fee is required as per Table 1b
FORM INC22	Registered office Change Notice	Within 30 Days of event	Y
FORM DIR12	Changes In Director /Manager	Within 30 Days of event	Y
FORM SH7	Increase in Share Capital /Members	Within 30 days of event	Y
FORM MGT14	Registration of Resolution / Agreement	Within 30 days of event	Y
SCHEDULE V	Annual Return	Within 60 Days of AGM	Y
SCHEDULE VI	Balance Sheet and Profit & Loss Account	Within 30 Days of AGM	Y
FORM CHG1	Creation / Modification of Charges	Within 30 days of event	Y
FORM CHG4	Particulars for satisfaction of charge	Within 30 Days of event	N
FORM INC28	Notice of Court / CLB Order	NA
FORM PAS3	Return of Allotment	Within 30 days of event	Y
FORM INC27	Conversion of Public to Private application vice versa	Within 30 days of event	N
FORM CHG9	Particulars of Series of Debentures	Within 30 days from event	Y
FORM INC18	Application to Regional Director for conversion of section 8 company into any other kind of company	Within 30 days of event	Y
FORM INC20	Intimation to Registrar of revocation or surrender of license issued under section 8	Within 30 days of event
FORM INC23	Application to Regional director for approval to shift the registered office from one state to another state or from jurisdiction of one registrar to another within the state	Within 30 days of event	Y
FORM INC 24	Application for approval of Central Government for change of name	Within 30 days of event	Y
FORM INC-28	Notice of order of the Court or other authority	Within 30 days of event	Y
FORM PAS-3	Return of allotment
FORM SH-8	letter of offer
FORM SH-11	Return in respect of buy back of securities	Within 30 days of event	Y
FORM CHG-6	Notice of appointment or cessation of receiver or manager	Within 30 days of event	Y
FORM CHG-9	Application for registration of creation or modification of charge for debentures or rectification of particulars filed in respect of  creation or modification of charge for debentures	Within 30 days of event	Y
FORM MGT-6	Form of return to be filed with the Registrar	Within 30 days of event	Y
FORM MGT-14	Filing of Resolutions and agreements to the Registrar under section 117	Within 30 days of event	Y
FORM DIR-6	Intimation of change in particulars of Director to be given to the Central Government	Within 30 days of event	Y
FORM DIR-11	Notice of resignation of a director to the Registrar	Within 30 days of event	Y
FORM MR-1	Return of appointment of managing director or whole time director or manager	Within 30 days of event	Y
FORM MR-2	Form of application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and omission or remuneration to directors	Within 30 days of event	Y
FORM URC-1	Application by a company for registration under section 366	Within 30 days of event	Y
FORM FC-1	Information to be filed by foreign company	Within 30 days of event	Y
FORM FC-2	Return of alteration in the documents filed for registration by foreign company	Within 30 days of event	Y
FORM FC-3	List of all principal places of business in India established by foreign company	Within 30 days of event	Y
FORM FC -4	Annual Return	Within 30 days of event	Y
FORM GNL-1	Form for filing an application with Registrar of Companies	Within 30 days of event	Y
FORM GNL-2	Form for submission of documents with Registrar of Companies	Within 30 days of event	Y
FORM GNL-3	Particulars of person(s) or director(s) or charged or specified for the purpose of section 2(60)	Within 30 days of event	Y
FORM RD-1	Form for filing application to Regional Director	Within 30 days of event	Y
FORM RD-2	Form for filing petitions to Central Government (Regional Director)	Within 30 days of event	Y
FORM CG-1	Form for filing application or documents with Central Government	Within 30 days of event	Y