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Section 8 of the Companies Act, 2013 defines Limited Company incorporated with the sole Objective of Promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object. Such Companies are incorporated with aim of betterment of Society and operate their Business Activities without any Intent to make any Profit or Revenue. Section 8 Company is one of the categories of a Non-Profit Organization or NGO.
Some Important Points we need to know before incorporating a section 8 Company are-
1. Minimum 2 Members are required to form a Section 8 Company.
2. Minimum 2 Directors are required to form a Section 8 Company.
3. Such Companies will be restricted to only spend their profits or other forms of Incomes in Promoting the Objects of the Company. In another words it means that the profits of the company will be utilized only for social work.
4. Such Companies will not be allowed to pay Dividend to their Members.
5. Such Companies are not required to suffix the word name Limited or Private Limited next to its Legal name.
6. Ministry of corporate Affairs is the Central Authority that issues License for incorporating a section 8 Company.
7. A company registered under this section will not be allowed to alter the provisions of its memorandum or articles except with the prior approval of the Central Govt.
8. Company registered under this section may convert itself into company of any other kind only after complying with Certain Conditions.
9. The Central Government has the power to pass an order to revoke the license granted to a company registered under this section if the company contravenes any of the requirements of this section or performs any Act which is against the Public Interest.
10. The Consequences can be extremely rigid as, failure to comply with the responsibilities stated by the Central Government may lead to the winding up of the company. Besides, that strict legal action will be taken against the Company and all its members if the objectives laid down by the company proves to be bogus.
Section 8 Company Registration is very detailed procedure, which requires keen knowledge, procedure and team of professionals. Each Company incorporation has its tailored requirements. We at YourLegalExpert.in have a full-fledged, dedicated team of professionals. You are required to fill the form and then our experts will reach out to you, to know the exact requirement and gather further information. Then our experts at YOURLEGALEXPERT.IN will be at your disposal for assisting you with guidance concerning Company Registration and its compliances. Our professionals will assist you in planning seamlessly at the least cost, confirming the successful conclusion of the process. We shall guide you with Do’s and Don’t’s as well.
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No, as per the Notification of MCA date 30.05.2022 we cannot use the word Micro frames/Micro-Credit as an Object in the Object Clause of MoA while incorporating Section 8 Company even by the way of Passing Special Resolution unless requirements of such NOF and other requirements laid down by RBI Directions are Complied.
Foreign donations are allowed only when FCRA (Foreign Contribution Regulation Act 1976) registration has been done. FCRA license can only be applied after 3-years from the date of registration. However, if some really urgent foreign donations are necessary, then you may apply for a prior permission from the commissioner.
No, Section 8 can Freely Receive Domestic Donations.
No, Directors or promoters of the company cannot withdraw any remuneration in any form.
Yes, There must be Annual filing of accounts, statements and returns of the company with the ROC, in order to adhere to the set compliances.
Startups are becoming very popular in India. In order to develop the Indian economy and attract talented entrepreneurs, the Government of India, has started and promoted the Startup India initiative to recognize and promote startups.
Under the Startup India initiative, eligible companies can get recognised as Startups by DPIIT, in order to access a host of tax benefits, easier compliance, IPR fast-tracking & more.