Section 8 Company – NGO

Section 8 of Companies Act, 2013 provides: 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—

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(b) intends to apply its profits, if any, or other income in promoting its objects; 

(c) intends to prohibit the payment of any dividend to its members, the Central Government may, by license issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.

REGISTRATION:  Like Trust and Society, Section 8 Company is also a legal form that NGO generally takes. This Form of organization is governed by Companies Act, 2013. These are the Limited Companies registered under Companies Act.

CONDITIONS: Following conditions required to satisfy in order to get register under Section 8 company 

1. Main object of such company should be related to the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object and 

2. Profits or 

3. No dividend any other income earned from its operation should be applied in promoting its object and shall be distributed by such company to its members.

USE OF WORD “LIMITED” OR “PRIVATE LIMITED” : Central Government may, by issuance of license and on such condition as CG deems fit, allow to be registered as Limited Company without using the word “LIMITED” or “PRIVATE LIMITED” to its name.  

LIABILITY OF MEMBERS: Section 8 company can be registered only as either “Company Limited by Shares” or “Company Limited by Guarantee” meaning thereby that Liability of members of section 8 company shall be limited to the extent of share subscribed for by each member of the company or to the extent of their contribution in case of Company limited by Guarantee.

APPLICABLE SECTION AND RULES: 

Section 8 read with Rule 8A, 19 of Companies (Incorporation) Rules, 2014 

APPLICABLE FORMS/DOCUMENTS AND INFORMATION: 

Form INC 13 – Memorandum of association in 

Declaration in INC 14 (by CA/CS/CMA in Practice or by advocate) 

Declaration in INC 15 (by each person making application) 

Estimated Income and Expenditure for next 3 Years 

Form INC 9 – Declaration by all Subscribers and first Directors (Auto generated in PDF format) 

Form DIR 2 – Consent to act as Director in 

Article of Association 

Rent Agreement or Ownership Paper, as the case may be 

NOC of Landlord 

Address Proof of Registered Address 

List of Promoters (KYC Documents) 

List of Directors (KYC Documents and DIN, if any) 

Mail Id and Phone No. of above persons 

ID and Address Proof of above persons 

Passport Size photograph of person

PROCEDURE:

 1. NAME APPROVAL:

Application for approval of Name is to be made in SPICe Plus “Part A”. According to Rule 8 of Companies (Incorporation) Rules, 2014, proposed name of Section 8 Company should include the word Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust and the like, etc.

Earlier, such proposed companies requires to make an application for issue of License to CG (ROC) in Form No. INC 12 to incorporate such type of company without addition to its name the word “Limited” or “Private Limited” But MCA, vide its notification no. 411 (E) dated 07.06.2019 has done away such requirement and such application for License is now merged with SPICe Plus Form.

2. APPLICATION FOR INCORPORATION OF COMPANY: 

Application for incorporation to be made in SPICe Plus “Part B” along with various attachments as stated above. 

3. APPLICATION FOR COMMENCEMENT OF BUSINESS: 

After receiving Certificate of Incorporation Directors of Company require to file a Declaration in e-Form INC-20A with ROC within 180 Days from the date of Incorporation.