A non-Government Company is also known as a non-Profit Company or Non-Profit Organization is an entity that is not driven by profit but by a willingness to serve a social cause operated for a collective, public or social benefit. It is incorporated with the Central Government through the Ministry of Corporate Affairs under section 8 of the Companies Act, 2013 with Rule 19 and 20 of Companies (Incorporation) Rules, 2014.
Section 8 Company registration is only possible if it is incorporated only for the welfare of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other object that benefits society directly or indirectly.
As per Indian law, 3 legal forms exist for NGOs or Non-Profit Organizations:
However, among all these Section 8 Company has multiple benefits that are as follows:
A. The Separate Legal Entity: Under the Companies Act, 2013, the Section 8 Company registration is treated as a legal entity. It has separate management & ownership and possesses many legal capacities, and members of a company have no personal liability.
B. The Perpetual succession : A company registered under Section 8 has “perpetual succession”, which means it is unaffected by the death or departure of any member and continues to exist until it is legally dissolved.
C. The Global Recognition : Such a company can undertake charity and social welfare activities across the political border of the country with the help of some globally recognized organizations such as the Indian Red Cross Society, World Health Organization, UNICEF, UNESCO, United Nations Foundation, etc.
D. The Property Ownership : A non-Profit Company or Section 8 Company being an artificial person, can acquire, own, and alienate property in its own name. The property owned by a company could be anything, and no shareholder can claim the property of the Company
E. The Tax benefits: As per section 8 of the Companies Act, 2013, the NPO is required to get itself registered under sections 12A and 80G of the Income Tax Act, 1961 to avail of the exemptions and deductions related to charity and welfare activity. Also, under section 135 of the Companies Act, 2013, Section 8 companies are allowed to accept donations and funds.
Requirements for section 8 company registration process
Procedure for Incorporation of Section-8 Company:
The followings steps are required for Section 8 Company registration
Step -1 – Apply for the name approval
Applicants must have to login into their account on the MCA Website. After login one has to fill in the online form.
Step -2 – Application for License
It must be filled in form INC 12 with the required attachments:
Step – 3 – Preparation of Documents
To avoid legal compliances, it is must submit all the necessary documents, which include:
Step – 4 - Fill in the information in the e-form “Spice” INC-32.
Step – 5 – applicant has to download the e-form INC-33 (MOA) and IN-34 (AOA) from the MCA site.
Step – 6 – Fill in details of PAN & TAN
Step – 7 - Submission of INC-32,33,34 on MCA
Step – 8 – Obtain the certification of incorporation issued by the Registrar of Companies in form INC 11 in electronic form
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