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Section 8 company incorporation
A Section 8 Company is incorporated under the provisions of the Companies Act, 2013 with the objective of promoting charitable activities such as education, social welfare, environment protection, art, science, religion, or other not-for-profit purposes.
Unlike other companies, it is granted a license by the Central Government, and profits, if any, are applied solely towards promoting its objectives.
Legal Framework for Incorporation of Section 8 Company in India
- Section 8 of Companies Act, 2013
- Companies (Incorporation) Rules, 2014
- Relevant MCA notifications & circulars
Step-by-Step Incorporation Procedure
1. Obtain Digital Signature Certificate (DSC)
All proposed directors and subscribers must obtain DSC from authorized certifying authorities for e-filing on the MCA portal.
2. Application for Name Reservation (SPICe+ Part A)
- File SPICe+ Part A for reservation of name.
- The name should reflect the charitable nature of the entity.
- Words like Foundation, Association, Forum, Federation, Council are generally used.
3. Preparation of Incorporation Documents
Draft the following carefully:
- Memorandum of Association (Form INC-13)(Now in E-form)
- Articles of Association (AOA)(Now in E-form)
- Estimated Income & Expenditure for next 3 years
4. Filing of SPICe+ Part B (Incorporation Form)
After approval of license:
- File SPICe+ Part B along with:
- Director details (DIN allotment, if required)
- Registered office address
- Subscriber details
Attachments:
- Estimated Income & Expenditure for next 3 years
- Identity & Address Proof of Directors
- Utility bill & NOC for registered office
5. PAN & TAN Allotment
- Applied automatically through SPICe+
- Issued along with incorporation certificate
6. Certificate of Incorporation (COI)
Upon verification, the ROC issues:
- Certificate of Incorporation
- Corporate Identification Number (CIN)
- PAN & TAN
- Section 8 License Number
👉 Looking to incorporate a Section 8 Company?
Key Characteristics of Section 8 Company
- No minimum capital requirement
- No dividend distribution permitted
- Limited liability structure
- Separate legal entity
- Higher credibility compared to Trust/Society
Post-Incorporation Compliances
- Opening of bank account
- Appointment of auditor
- Filing of INC-20A (Commencement of Business), if applicable
- Maintenance of books of accounts
- Annual filings: AOC-4 & MGT-7
- Application for 12A & 80G Registration (Income Tax benefits)
Conclusion
The Section 8 Company structure provides a robust legal framework for non-profit organizations, ensuring transparency, accountability, and credibility. Although the incorporation process involves regulatory approvals, it is the most preferred structure for NGOs intending to operate at scale.
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