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, and 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.

The objects of Sec 8 companies are prescribed under Section 8(1) as below:-

Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other objects;-

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:-

• power to borrow moneys other than on debentures
• power to invest funds of the company
• 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.

Formation

Section 8 company may formed by a person or an association of persons proposed to be registered under this Act as a limited company having its objects as discussed above subject to the satisfaction of the Central Government.   It is onus on the part of the applicants to prove to the satisfaction of the Central Government that the proposed company is to be formed for the charitable objects as discussed above. The company will be formed by means of a licence granted by the Central Government subject to the conditions imposed by the Central Government to be registered as a limited company under this Section without the addition to its name of the word ‘Limited’ or ‘Private Limited’.   The Registrar shall, on application, register such person or association of person as a company under this section.  Section 8 company shall enjoy all the privileges and be subject to all the obligations of limited companies.  A firm may be a member of the company.

Licence:-

Rule 19 of the Companies (Incorporation) Rules, 2014 provides for the procedure for issue of licence to Section 8 Companies.  The following is the procedure for grant of licence:-

Major Steps involved for incorporation of Section 8 Company

• Getting DSC
• Getting DIN
• Name Search and application for Name Availability.
• Drafting of Bye Laws (MOA & AOA)
• Approval From Regional Director
• Filing of various forms.

Getting DSC

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.

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)
• Valid Email Id and Mobile No.

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 intend to a section 8 company must have at least 2 directors & a public company intend to a section 8 company must have at least 3 directors.

Required documents/information’s for Allotment of DIN:-

• Self attested copy of the PAN Card, the signature must be same as in PAN
• Self attested identity proof of the proposed directors (Voter ID Card/ Valid Driving License/ Valid Passport/ Aadhar Card etc).
• Self attested Address proof of the proposed directors (Latest Bank Statement within 2months Showing current transactions/ Latest Telephone or Mobile Bill/ Latest 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 No.

*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 signature is not the same with the 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 “Private Limited" or “Limited” as the case may be.
• The application should mention at least two suitable names to maximum 6 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 which 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.

The following information is required for seeking name approval:-

• Proposed name of the company and Alternative names (2 to 6 names)
• Names of the proposed first promoter/ director – minimum 2/minimum 3 as the case may be.
• Authorized Share Capital – minimum INR 100000/ minimum INR 500000 as the case may be.
• Main objects of the company in brief. (In 200 alphabetic words)
• Address of Registered office of the proposed company
• Address of the nearest police station of the 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.

Drafting of Bye Laws (MOA & AOA)

The Memorandum of Association is a document that sets out the constitution of the company. It contains, amongst others, the main objectives, incidental or ancillary objectives for the attainment of the main objectives and the scope of activity of the company and also describes the relationship of the company with the outside world.

The Articles of Association contain the rules and regulations of the company for the management of its internal affairs. While the Memorandum specifies the objectives and purposes for which the Company has been formed, the Articles lay down the rules and regulations for achieving those objectives and purposes. It also states the authorized share capital of the proposed company and the names of its first / permanent directors.

Incorporation Process

I. 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:-

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

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

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

II. 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.

III.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.

IV.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.

V. 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.

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

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

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:

DOCUMENTS / FORMS REQUIRED AFTER INCORPORATION

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