Nation NGO Registration
NGO (Non-Government Organization) is an organization that works for non-profit/ charitable purposes. An NGO established as Section 8 company under the Companies Act, 2013 (‘Act’) is governed by the Ministry of Corporate Affairs (‘MCA’) whereas the NGO registered as a trust or society is governed by the registrar of state under the State Government.

Section 8 company registration has more benefits in comparison to trust and society. This type of company has more credibility among government departments, donors, and other stakeholders. In this article, we will explain how to register as an NGO in the form of Section 8 Company, under the Companies Act, 2013.

Required Documents-

For Directors/Shareholders

PAN Card of owner
Passport size photograph of Directors
Copy of Aadhaar Card/ Voter identity card of directors
Copy of Rent agreement(If rented property)
Electricity/ Water bill (Business Place)
For Registered Office

Ownership Proof (House Tax etc.) or Rent Agreement
Utility Bill (Gas Bill, Electricity Bill)
NOC(from owners – if the premises is rented)
liable for the losses of the company.

Credibility: Section 8 companies are more credible and reliable than any other form of a charitable organization. It is regulated under the provisions of the Act, thus they need to have mandatory audits every year and the Memorandum of Association cannot be altered relating to the non-profits objectives of the company.

Exemption to the donors: The tax exemption is granted to the donations received by the section 8 company under Section 12A and 80G of the Income Tax Act, 1961.

Section 8 Company Registration Eligibility

An Individual, HUF is eligible to start a Section 8 company in India.
Two or more persons who will act as Directors or shareholders should fulfil all the compliances and requirements of the Section 8 company incorporation under the Act.
There must be at least one director who should be a resident of India in the Section 8 company.
The objective must be one or more of the following – promotion of sports, social welfare, the advancement of science and art, education and financial assistance to lower-income groups.
Founders, directors, members directors of the company cannot draw any remuneration in any form of cash or kind.
No profit should be distributed among the members and directors of the company directly or indirectly
Section 8 Company Incorporation Requirement

Directors

A minimum of two directors is required if the Section 8 company is to be incorporated as a private limited company, and a minimum of three directors in case of incorporation as a public limited company. The maximum number of members is 200 in the case of a private limited company, whereas for a public limited company, there is no such limit.

Capital Requirement and Name

There is no requirement of minimum paid-up capital in the case of a Section 8 company incorporation. NGOs established as a Section 8 company need not use the words ‘Limited’ or ‘Private Limited’ in their name.

Charitable Objects

Section 8 companies are incorporated with non-profit objectives. The MOA and AOA must mention the non-profit objective or purpose for which it is established. Any profits earned by the section 8 company is utilised for the furtherance of its main objectives, i.e. charitable purposes or reinvested in the company. The profits will not be distributed among its members.

Management

Section 8 company is managed by the Board of Directors as per the MOA and AOA of the company, unlike other trusts that are managed by the Trustees as per the Trust Deed.

Regulation under Various Acts

A Section 8 company needs to follow the rules and regulations prescribed under the Companies Act, 2013. It needs to maintain books of account, and file returns with the Registrar of Companies. Section 8 company cannot make any changes to the provisions of MoA and AoA without the prior approval of the Central Government. It also needs to follow the provisions of the Income Tax Act and GST Law.

Obtain DSC (Digital Signature Certificate)

Digital signatures of the proposed directors of the company are required as the forms for the registration process are filed online and should be digitally signed. Digital signature certificates (DSC) are issued by a government recognized certifying agencies. The list of such certified agencies can be accessed here. The cost of obtaining a DSC varies depending upon the certifying agency. You must obtain a Class 3 category DSC.

Apply for Director Identification Number (DIN)

You have to apply for a DIN for the proposed directors of the company. The application for allotment of DIN has to be made in Form DIR-3 or along with the SPICe+ form for registration. You have to attach the scanned copy of the necessary documents such as a self-attested copy of PAN, Identity and Address proof of directors along with the form and submit it online on the MCA Portal. The form must be attested by a practicing professional who can be a chartered accountant, a company secretary, or a cost accountant
Forms Required for Section 8 Company Registration

Name of the form Purpose of the Form

SPICE+ Application for Incorporation of Company

INC 12 Application for License

INC 13 Memorandum of Association

INC 14 Declaration from a practising Chartered Accountant

INC 15 Declaration from each person making the application

INC 16 License to incorporate as Section 8 company

INC 22 Situation of Registered Office

DIR 2 Consent of Directors

DIR 3 Application to ROC to get DIN

DIR 12 Appointment of Directors

Purpose of the Section 8 Company Forms

Form INC-12

Form INC-12 is filed for the grant of the license to operate as a Section 8 company. Along with this form, applicants are required to attach a draft copy of the Memorandum of Association (MOA) and Articles of Association (AOA).

There is a prescribed format for Memorandum of Association of a Section 8 company in Form INC 13. The subscription pages of the MOA and AOA shall be signed by each subscriber along with their name, address, description, and occupation, in the presence of at least one witness.

Form INC 12 is to be submitted along with the following attachments :

INC-13 – Memorandum of Association

Draft Articles of Association

INC-15 for the declaration by each subscriber to MOA that the draft memorandum and articles of association have been drawn up in conformity with the provisions of Section 8

Estimated statement of Income & Expenditure for the next three years

List of proposed Promoters and Directors of the Company

The following forms are required to be filed after the issuance of the license to the company
Address Proof needs to be attached for obtaining DSC.

Step 2 – Once the DIR-3 is approved, the ROC will allot a DIN to the proposed directors.

Step 3 – File Form INC-12 with the ROC to apply for a licence for the Section 8 company along with the attachment of the required documents as mentioned above.

Step 4 – Once the form is approved, a license under section 8 will be issued in Form INC-16.

Step 5 – After obtaining the license, file the SPICe+ Form with the ROC for incorporation along with the required attachments as mentioned above.

If the ROC is satisfied with the forms submitted, he issues a Certificate of Incorporation along with a unique Company Identification Number (CIN)
Penalty for Non-Compliance under Companies Act

The Central Government will revoke the Section 8 company license if it fails to comply with the legal provisions of the Act. If the objectives of the company are conducted fraudulently or in violation of the objectives for which it is established, the license can be revoked.

If a company defaults in complying with the provisions of the Act, the company will be punishable with a fine not less than Rs.10 lakh and may extend to Rs.1 crore. The Directors and the officers of the company in default of the provisions of the Act will be punishable with a fine not less than Rs.25,000 which may extend to Rs.25 lakh or both.

Annual Compliances of Section 8 Company

The annual compliances of section 8 company are just like the other companies.

Conduct a minimum of two board meetings in a year
Maintenance of Books of Accounts
Preparation of financial statements
Mandatory audit report
Income tax return filing
Filing of financial statements in form AOC 4
An annual return is to be filed every year with other e- filing forms like MGT 7
Additional compliances to fulfil the registration like 12AA, 80G, etc