An organization registered as a Non-Profit Organization (NPO) must comply with Section 8 of the Companies Act 2013. Sports, science, research, social welfare, and religion are some of the areas where Section 8 companies deal with arts, commerce, education, charity, environmental protection, charity, and promoters of the arts and commerce. Profits or other income from a Section 8 company are used to promote the objectives of the company.
A Section 8 company, as defined by the central government, must follow some objectives or intentions.
A Section 8 company may be formed by anyone who meets the following requirements:
* It is possible for a company to apply for a Section 8 corporation if it wishes to promote science, arts, commerce, sports, education, research, charity, religion, social welfare, or environmental protection
* Applicants for Section 8 corporations must intend to use their profits (if any) or any other income to promote social welfare or their primary objective to promote such objectives.
* Company owners can also register themselves as Section 8 companies if they declare not to pay any dividends to their members.
The Essentials of Incorporating a Section 8 Company
Section 8 Companies are incorporated in accordance with the Companies Act, 2013. Form No. must be completed by an organization or individual according to the section. If they wish to incorporate a Section B company, they should use INC.12. In addition to INC.12, other documents are required.
* Form no. INC – 13: An initial draft of the company’s Memorandum of Association and Articles of Association (AOA) is provided in Form No. According to the act, INC – 13 must include photographs of the applicant.
* Form no. INC-14: Along with Form no., the applicant must attach a declaration form. In Inc-14. Ensure that MOA & AOA comply with section 8 provisions and norms. An Advocate, Chartered Accountant, Company Secretary, or Cost Accountant must notarize the application on stamp paper as per the act.
* Form no. INC-15: The applicant must sign the form on stamp paper and have all of the company members notarize it.
* Form no. INC-9: In addition to the directors, each subscriber should complete the INC-9 Form. It must also be notarized and stamped with the state’s stamp. For the next three years, the applicant must declare the company’s estimated expenditures and annual income. In addition, they need to mention the sources of their income and the purpose of their expenditures.
Documents needed for application
* Digital signature certificate
* Association Memorandum
* Association Articles
* Photographs of the applicants taken recently at passport size
* Information about the director if the members are from different companies or organizations
* Members’ valid identification, such as Aadhar cards, passports, and voter cards
* Address information
* Director’s identification number
Section 8 Companies: The Benefits of Incorporation
* By promoting and obtaining integrity in the work process, Section 8 companies are allowed to perform any activity.
* It is a non-profit organization that follows strict rules and has a clear image in front of its external and internal users.
* Section 8 companies work like charitable organizations and are more reliable in their operations.
* Grants and subsidies are acknowledged via the government and other institutions by the communities of trust.
Section 8 Exemptions and Reliefs
Section 8 companies are not subject to the directorship act of 165 since they can appoint more than three directors.
* For any general meeting, the companies can give 14 days’ notice, unlike other companies, which require 21 days’ notice.
* Instead of holding four meetings a year, the Section 8 company can meet at least once every six months.
* Minutes of General Meetings and Board Meetings are not required for Section 8 companies. Occasionally, the company must provide the outcome of the meeting within 30 days.
* As a section 8 company, the company is exempt from appointing an independent director. Operational decisions are made by the audit committee and the board of directors.
* The company is exempt from appointing independent directors because it is a section 8 company. Board members and the audit committee are responsible for the company’s operations.
* CS professionals are not required to be appointed as company secretaries in Section 8 companies, which is why anyone can become the company secretary.
* Stakeholders Relationship Committees and Nomination and Remuneration Committees are not required for Section 8 firms
Director Appointments in Section 8 Companies
* Under section 149(1) of the Companies Act 2013, public limited companies can appoint three directors and private limited companies can appoint two directors. The maximum number of directors that can be appointed by a company is 15. As Action 8 companies are exempt from this rule, they can appoint directors as they see fit.
* In any class of company, section 149(1) declares that a woman director should be preferred.
* The number of directorships in Section 8 companies need not be summed under Section 165 of the Companies Act, 2013.
* A Section 8 company is not required to appoint an independent director for guidance under Section 149(1) of the Companies Act, 2013, via an exemption notification dated June 05, 2016.
* A Section 8 company is not required to appoint an independent director for guidance under Section 149(1) of the Companies Act, 2013, via an exemption notification dated June 05, 2016.
* Section 8 companies are required to have at least one resident director under Section 149(3). Before applying for a section 8 company registration, the resident director must have stayed in India for at least 182 days.
Conclusion
In short, notarization of Memorandum and Articles of Association is not a requirement for a section 8 company. In this sense, setting up a section 8 company is easier than setting up a private or public company. If you want your section 8 company to be approved, you must follow the guidelines.
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