company law

How to Incorporate a Section 8 Company: A Step-by-Step Guide

Procedure for Incorporating Section 8 Companies

Incorporating a Section 8 company, which is formed for charitable or social purposes, involves several steps that ensure compliance with legal requirements outlined by the Central Government. Below is a structured guide to facilitate the process.

Eligibility Criteria

To qualify for registration as a Section 8 company, the following conditions must be met:

  1. The applicant's objectives must include the promotion of:
    • Commerce
    • Art
    • Science
    • Sports
    • Education
    • Research
    • Social welfare
    • Religion
    • Charity
    • Environmental protection
    • Other similar objectives.
  2. The entity must intend to apply its profits or income towards promoting these objectives.
  3. It must prohibit the payment of dividends to its members.

Step 1: Check Name Availability and Apply

The incorporation process begins with reserving the proposed company name using Part A of the SPICe Plus (SPICe+) form.

  • Procedure:
    • Select your business activity.
    • Submit two proposed names for approval to the Central Registration Centre (CRC).
    • If the proposed name is rejected, resubmit two new names within 15 days of rejection.

Note: A Digital Signature Certificate (DSC) is mandatory for all applicants.

Step 2: Filling the Application for Incorporation

Once the name is reserved, it is valid for 20 days. During this period, the following steps should be undertaken:

  1. Complete the SPICe+ Form: This advanced form consolidates 8 forms into one and must include:
    • Details of directors and shareholders.
    • Authorized share capital.
    • Paid-up capital.
    • Registered address.
    • Required attachments as proof.
  2. Draft the MOA (Memorandum of Association) and AOA (Articles of Association).
  3. Complete EPFO and ESIC registration forms.
  4. Fill the AGILE form for obtaining GSTIN.
  5. Upload the completed forms on the MCA website.

Extension of Name Reservation

If necessary, you can extend the name reservation:

  • Up to 40 days: Pay ₹1,000 before the 20-day expiry.
  • Up to 60 days: Pay ₹2,000 if done before the 40-day expiry.
  • Up to 60 days with an increased fee: ₹3,000 if paid before the 20-day expiry.

Step 3: Additional Documentation for Section 8 Companies

Along with the SPICe+ form in Part B, additional documents are required, including:

  • Physical copies of the:
    • MOA and AOA, signed by members and witnesses (INC-13 and INC-31).
  • An estimate of the company's annual income for the next three years, detailing income sources and expenditure.
  • Declaration in Form INC-14 by a practicing professional.

Step 4: Post-Incorporation Compliance

If a temporary address is provided for the registered office, the following must occur:

  1. File notice of the registered office within 30 days of incorporation using Form INC-22.
  2. If the company has a share capital, submit a declaration in Form INC-20A (Certificate of Commencement of Business) within 180 days, certifying:
    • All subscribers to the MOA have paid for their shares.
    • The registered office verification has been filed with the ROC.

Required Documents for Incorporating a Private Limited Company

  1. ID Proof of all proposed Directors and Members:

    • Options include Passport, Voter's ID, Driving License, PAN, Aadhar, etc.

  2. Address Proof for directors and members:

    • Utility bills, bank statements, rent agreements, etc.

  3. Additional Documentation if a subscriber is a corporate entity:

    • A resolution authorizing subscription to the MOA.
    • ID proofs of authorized representatives.

  4. Foreign Entities must provide:

    • A copy of the Certificate of Incorporation (COI) and a resolution.
    • Necessary declarations regarding PAN status.

Filing and Submission Process

Prepare and download the following web forms for attaching DSCs:

  1. SPICe+ Part B (INC-32)
  2. Agile-Pro-S (INC-35)
  3. Declaration in Form INC-9 (auto-generated), applicable if total subscribers/directors are ≤ 20 and all have DIN/PAN.

For existing companies looking to convert:

  • File INC-12 for a license under Section 8.

Correction Period

If deficiencies are identified, a corrective period of 15 days is provided, with the total re-submission period not exceeding 30 days.

Final Steps

Upon satisfactory review, the CRC will issue:

  • License in Form INC-16.
  • Certificate of Incorporation (COI) in Form INC-11.
  • Any requested DIN, PAN, and TAN for the company.

Through these structured steps, establishing a Section 8 company can be effectively managed while adhering to necessary legal protocols.