- Non-profit Motive: Established for promoting social welfare, arts, education, religion, charity, environmental protection, or other similar objectives.
- Limited Liability: Protects the personal assets of its members from company debts.
- Separate Legal Entity: The company has a distinct legal identity from its members and can own property, enter into contracts, and sue or be sued in its own name.
- No Profit Distribution: Profits earned by the company cannot be distributed as dividends to members. Profits must be used to further the company’s social objectives.
- Compliance: Needs to adhere to regulations and file reports with the Registrar of Companies (ROC).
- Credibility and Recognition: A Section 8 structure offers a credible and recognized legal form for non-profit organizations, potentially attracting grants and donations.
- Limited Liability Protection: Protects members’ personal assets, encouraging them to participate in social initiatives without risking their finances.
- Tax Exemptions: May be eligible for tax benefits on donations and income received for charitable purposes.
- Minimum Members: Two members (shareholders) and two directors are required to form a Section 8 company.
- Director Identification Number (DIN): Each director needs a DIN, a unique ID issued by the Ministry of Corporate Affairs (MCA).
- Digital Signature Certificate (DSC): Required for online filing of documents with the MCA.
- Name Approval: Choose a unique name that complies with Section 8 company name guidelines and get it approved by the MCA.
- MoA and AoA: Prepare the Memorandum of Association (MoA) outlining the company’s objectives and the Articles of Association (AoA) defining internal rules and regulations.
- Incorporation: Upon submitting the application and documents, the MCA will process it and issue a Certificate of Incorporation, formally registering the Section 8 Company.
- The registration process can be completed online on the MCA portal.
- Consider professional services to assist with the registration process for a smoother experience.
- Registration time typically takes around 7-10 working days.
- There are associated government fees and professional fees (if applicable).
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