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Registering your NGO as a Section 8 Company offers several advantages over registering as a trust or society. A Section 8 Company is a specialized type of organization incorporated for the promotion of commerce, art, science, education, research, sports, charity, social welfare, religion, environmental protection, or similar objectives. All profits, income, or earnings are directed toward advancing these purposes, with no dividends or income distributed to its members.

These are limited companies registered under the Companies Act and are treated as such, but without the term “Limited” in their name. They can be registered as either private limited or public limited companies. Section 8 Companies are the updated version of Section 25 Companies under the Companies Act, 1956.

As a recognized legal form of Non-Profit Organizations (NPOs) or Non-Governmental Organizations (NGOs), Section 8 Companies have the authority to operate anywhere in the country.

The process and requirements for registering a Section 8 Company are identical to those for a limited company, including all associated rights and obligations. The key distinction is that a Section 8 Company cannot include the words “Section 8” or “Limited” in its name.

The registration process for a Section 8 Company is similar to incorporating an NGO, trust, or cooperative society under the Companies Act, 2013. However, an additional requirement involves obtaining a license from the central government under Section 8 of the Companies Act, 2013.

This license allows the company to omit “Private Limited” or “Public Limited” from its name. It also provides eligibility for specific legal exemptions and fee concessions.

For a proposed Section 8 Company registered as a private limited company, at least two directors are required. For a public limited Section 8 Company, a minimum of three directors is necessary.

STEP 1: Run Approval:
Reserve Unique Name (RUN) is a form filed for reserving a name for a new company or for changing its existing name. This is the first step of incorporating a section 8 company.

A section 8 company shall usually have words like Foundation, Federation, Society, Council, Club, Charities, Institute, Academy, Organisation, Federation, Chamber of Commerce, Development, Association, etc.

The name so approved shall be valid for 20 days

STEP 2: RD 1 License:

This step is the most crucial in the process of incorporation.

The name approval shall be valid at the time of applying for the RD 1 License.

RD 1 license is a license granted under section 8 of companies act as they work on a specific objective which is for the upliftment of arts, science, commerce, environment, etc., and the profit they earn shall also be used towards their objectives. All crucial documents like the MoA, AoA, financial statements and other declarations are filed at this stage.

STEP 3: Spice Form:

Both the name and the license shall be valid at the time of filing the SPICe form.

This is the final stage of incorporating the section 8 company where the documents relating to the registered office like the rental agreements and utility bills are filed along with the RD-1 license and the name approval certificate.

• Directors’ Personal Documents: Submit identification and address proofs for all directors.
• Registered Office Address Documents: Provide the rental agreement or sale deed in the company’s name, along with utility bills not older than two months.
• Passport-Sized Photograph of Directors: Submit a recent passport-sized photograph for each director.
• Photo ID Proofs of Directors: Provide valid photo identification documents for all directors.
• Self-Declaration of Directorship: Submit a declaration regarding any directorships held in other companies.
• No Objection Certificate (NOC): Obtain an NOC from the property owner for using the premises as the registered office.
• Address Proof of Directors: Provide recent address proof for each director.
• Rent Agreement for Registered Office: Submit the rent agreement for the company’s registered office.

1. Organized Operations and Flexibility
   Section 8 companies ensure organized operations with greater operational flexibility.
2. Simplified Registration Process
   The registration process is less meticulous, and physical presence is not required.
3. No Minimum Paid-up Capital Requirement
   There is no mandatory requirement for a minimum paid-up capital.
4. Tax Benefits
   Easy procurement of tax benefits under Sections 12AA and 80G of the Income Tax Act.
5. Membership Flexibility
   Any partnership firm can become a member in its individual capacity and also obtain Directorship.
6. Separate Legal Entity
   A Section 8 Company is a separate legal entity distinct from its members and has perpetual existence.
7. Stamp Duty Exemption
   Exempt from paying stamp duty on the Memorandum of Association (MoA) and Articles of Association (AoA), unlike other company structures.
8. Flexible Capital Structure
   • No minimum capital limit is specified.
   • The capital structure can be altered as needed, allowing the company to operate without initial share capital.
   • Funds can be raised later through donations and subscriptions.
9. Name Flexibility
   Section 8 Companies are not required to suffix “Public Limited” or “Private Limited” to their name. They can register with names like “Association,” “Society,” “Council,” “Club,” “Charities,” “Foundation,” “Academy,” “Institute,” “Organisation,” or “Federation.”
10. Exemption from CARO
    Requirements under the Companies Auditor’s Report Order (CARO) are not applicable.
11. Tax Exemptions for Donors
    Donors are eligible for tax exemptions under Sections 12A and 80G of the Income Tax Act.
12. Reliability and Governance
    Section 8 Companies are more reliable than other charitable organizations due to strict regulation under the Companies Act, which mandates:
    • Annual audits.
    • Non-alterable Memorandum and Articles of Association (MoA and AoA).
    • Transparent management of profits and losses.
13. Trustworthiness
    Governance under the Companies Act, along with mandatory compliance requirements, makes Section 8 Companies trustworthy for donors and stakeholders.

Registration Under:
Companies Act, 2013.

License:  License to be applied to MCA.

Directors:] A Minimum of “2 Directors for a Private Limited Company and 3 Directors for a Public Limited Company” must be there.

Indian Resident:  At least 1 director must be a resident of India, i.e., have stayed in India for a total period of not less than 182 days in the previous calendar year [(Section 149(3)].

Subscribers to MoA: If the Company is proposed to be incorporated as a private company or a public company respectively, it’s MoA must have at least 2 or 3 subscribers.

MoA&AoA: Decide about the name to be applied for, objects to be carried by the Company, planned registered office address, number of Directors and promoters, authorized capital, and number of shares to be subscribed by each promoter. They must mention the plan laid-out to meet your social objectives. The ROC (Registrar Of Company) is entitled to ask about it.

Initial Capital: Whatever amount of initial capital has been proposed for the Company, it must get invested in the Company within 2 months.

Property Management:
The ownership of the property lies in the name of the Company and it can only be sold as per the rules mentioned under the Companies Act. (Ex: With the consent of the Board of Directors in the form of a resolution).

Dissolution: The Section 8 Company may be wind-up only by following the bye-laws of the society. Upon dissolution and after settling all debts and liabilities, the funds and property of the society are not to be distributed among the members of the company. Instead, the remaining funds and property would be given or transferred to some other Section 8 Company, someone that has a similar object.

Annual Compliance: There must be Annual filing of accounts, statements and returns of the company with the ROC, in order to adhere to the set compliances.

Documents: All the Directors must have their valid DIN (Director’s Identification Number) & DSC (Digital Signature Certificate).

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