An organization registered as the Non- profit organization (NPO) can be regarded as the section 8 company. The various objectives of section 8 Company are the promotion of arts, commerce, charity, education, protection of the environment, science, social welfare, sports, research, and religion.
One of the crucial points to be noted is that section 8 company shall invest its profits, or any other income received only in promoting its objectives. Further section 8 company functions exactly like a limited company in respect of all the rights and obligations. However, one significant distinction between a company and section 8 Company is that it cannot use the words Section 8 or Limited in its name.
In order to register a section 8 company, it is required to fulfill the following requirements-
Initially, the applicant is required to collect the above-mentioned documents along with the director's consent in DIR-2.
Further, the applicant is required to apply for the Digital Signature Certificate which is required for filling the various forms electronically in the Ministry of Corporate affairs.
It is mandatory for every director to obtain the valid Director's Identification Number from the Ministry of Corporate Affairs by filing Form DIR-3, in case the director does not have DIN.
The next step is one of the most crucial steps as it involves applying for the valid name of the company. While choosing a name an applicant must adhere to various guidelines as specified by MCA. Further, the applicant can give maximum six names in order of preference.
As soon as the approval is received the Memorandum of Association and Article of Association shall be drafted. Further, it shall be sent to ROC along with other documents in e-Form INC 13 for the issuance of the license under section 8 of the Companies Act, 2013. The subscription pages of both MOA and AOA shall be signed by each subscriber of the memorandum.
Memorandum of Association- It is legal document that defines the relationship of the company with its shareholders. It describes the company name physical address of registered office, names of shareholders and the distribution of shares etc.
Article of Association- It is the constitution of the company.It contain all the information regarding who holds the power distribution among directors, officers, shareholders etc, who holds right of vote and veto, the nature and form in which the primary business of the company is to be carried out etc.
To incorporate a section 8 company the applicant is required to file an application in form INC 12 along with the prescribed fees to register for obtaining a license. Along with INC-12 following documents shall also be submitted-
The applicant shall file the incorporation documents in the FORM INC 7(containing the declaration of compliance with the requirements of the Act on application for registration of a company), INC 22(regarding notice of situation of registered office) and DIR 12(for appointment of directors of the company) along with the prescribed fees. In case registrar of the company is satisfied with the contents of the documents that are filed a certificate of registration will be granted in form INC-16.