Education, employment, environment, medical etc are considered to be the pillars of development for any developing country and are expected to be provided by the Government. However, when these are not adequately taken care of by them, a Non-Government Organization (NGO) comes into the picture. NGOs generally carry out the same task in an effective manner without any profit motive.
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A section 8 company is a body corporate just like a private limited company but unlike a private limited company, it does not have a profit motive. Section 8 company is formed for a particular set of objectives which can be the promotion of sports, education, research, social welfare, and protection of the environment. Section 8 company is formed under the ministry of corporate affairs(MCA) which is a central government body. Section 8 Company may be incorporated as a company limited by shares or by Guarantee (with or without share capital). Company limited by guarantee means that there will be no share capital but each shareholder will contribute a nominal amount in case the company is wound up or closed.
In INDIA NGOs can be registered under the following heads;
Each one has its own merits and demerits. For more information on society and trust visit our section on society and trust.
Any two individuals or an individual and a partnership firm or any such combination can form section 8 company. The objective of such section 8 company should be for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object”, provided it “intends to apply its profits, if any, or other income in promoting its objects” and “intends to prohibit the payment of any dividend to its members.
The text of the Section 8 provision in the 2013 Companies Act reads:
COMPANIES ACT, 2013, Section 8 Formation of companies with charitable objects, etc.:
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 limited company:
Steps involved in registering a section 8 company is similar to incorporating a private limited company. Here are the steps involved in registering a section 8 company
If the MCA is satisfied with the documents it will grant a certificate of incorporation to the company within 30 days.
We value all our customers and attempt to offer our services as though they were our 'first client'. We ensure that the process is fast and smooth. Unlike others, we do not outsource our work and offer in house services coming through our specialists who are experts in their respective fields. We will assign you a dedicated manager who will support you from the start to end of the process and address any queries that you might have.
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After incorporation also, we will assist in further activities like
The central government has authorized registrars of varios jurisdictions to issue license to a Section 8 company.
No, Section 8 company may be registered as a company limited by shares or guarantee(with or without share capital)
Yes. As per rule 8(7) of the Companies (Incorporation) Rules,2014, for the Companies under Section 8 of the Act, the name shall include the words, foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc.
Section 2(42) of the Companies Act, 2013 defines the term "Foreign Company" and means any company or body corporate incorporated outside India which–
(a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and
(b) conducts any business activity in India in any other manner.
Now since a Company or a body corporate incorporated outside India for doing not-for-profit activities, which has opened a branch/ liaison office in India, cannot fall in the definition of a foreign company as a business activity is missing. Therefore, such a company cannot be termed as a foreign company. However, subject to compliance of FEMA regulations, it can open branch/liaison offices. Such not for profit companies or bodies corporate incorporated outside India can promote and register a Section 8 Company in India as a distinct entity.
Yes, under the Companies Act, 2013, a Partnership firm or an LLP can become a member of Section 8 Company. The provisions of respective Acts need to be complied with by the partnership firm or LLP as the case may be.
No, Section 8 Companies enjoy limited liability even without adding the words "Limited" or "Private Limited". No, it does not affect their limited liability.
Yes. Clause 4 of the Form INC 13 provided under rule 19(2) of the Companies (Incorporation) Rules, 2014 requires to make mention that – "The objects of the company extend to the ..............." Further like other Companies, section 8 Companies objects can extend beyond the state in which its registered office is situated.
Yes, subject to compliance of applicable RBI Act, Guidelines and directions, Section 8 Companies can carry out microfinance activities. The microfinance activities should be for the promotion of activities as stated in section 8(1)(a) of the Companies Act, 2013
Yes, in line with the objects stated in section 8(1)(a) of the Companies Act, 2013.
Yes, the objects of Section 8 Company can be altered by taking shareholders' approval and approval of Registrar of Companies in terms of Section 8.
There is no restriction on borrowing by Section 8 Company. However, provisions of section 180, if applicable, required to be complied with.