What is Section 8 of the Companies Act?

Section 8 of the Companies Act, 2013, allows the formation of a company with a charitable purpose. Unlike regular companies, Section 8 companies are established specifically for promoting commerce, art, science, education, research, social welfare, religion, charity, or any other useful object. The unique aspect of these organizations is that they are not meant to earn profits. Instead, any income generated is used solely for promoting the objectives of the organization.

Why Choose Section 8 Registration for Your NGO?

1. Legal Recognition

One of the most significant advantages of NGO registration under Section 8 is that it grants legal status to the organization. This recognition enables the NGO to operate officially and undertake various activities within the framework of the law.

2. Tax Exemption

Registered Section 8 NGOs can apply for tax exemptions under the Income Tax Act. This status allows the organization to receive donations and grants without the burden of tax liabilities, making it easier to fund their initiatives.

3. Limited Liability

Establishing an NGO as a Section 8 company provides limited liability protection to its members. In the event of financial difficulties or legal issues, the personal assets of the members are safeguarded, ensuring that only the assets of the organization are at risk.

4. Credibility

Having a Section 8 registration enhances the credibility of the NGO. It assures potential donors, partners, and beneficiaries that the organization is legitimate and operates under regulatory compliance.

5. Ability to Accept Foreign Contributions

Section 8 companies can accept foreign contributions, which can significantly enhance their funding avenues. This is particularly important for NGOs that aim to work on a larger scale and require financial support from international donors.

The Procedure for NGO Registration Under Section 8

Step 1: Obtain Digital Signature Certificate (DSC)

Before applying for registration, all proposed directors and subscribers must obtain a Digital Signature Certificate (DSC). This certificate is necessary for signing electronic documents, facilitating a smooth application process.

Step 2: Obtain Director Identification Number (DIN)

Each proposed director of the NGO must also obtain a Director Identification Number (DIN). This unique identification number is essential for the registration process and is mandatory for all directors.

Step 3: Name Reservation

Choose a suitable name for your NGO and check its availability. The name should reflect the objectives of the organization and must not be identical to any existing companies or trademarks. You can reserve the name by filing Form INC-1 with the Ministry of Corporate Affairs (MCA).

Step 4: Prepare the Memorandum and Articles of Association

The next step is to draft the Memorandum of Association (MoA) and Articles of Association (AoA) for your NGO. The MoA outlines the main objectives of the organization, while the AoA contains the rules and regulations governing its operations.

Step 5: File the Registration Application

Once you have the necessary documents, including the MoA and AoA, you can file the application for NGO registration under Section 8. This application should be submitted to the Registrar of Companies (RoC) along with the required fees and documents.

The required documents typically include:

• Identity proof of directors
• Address proof of directors
• DSC and DIN of all directors
• MoA and AoA
• Proof of the registered office address
• Declaration by the directors

You can find more information about the registration process on the official site here: NGO registration under Section 8.

Step 6: Scrutiny by the Registrar

After the application is submitted, the Registrar will review the documents and may request additional information or clarifications. It is essential to respond promptly to any queries to avoid delays in the registration process.

Step 7: Issuance of License

If the Registrar is satisfied with the application and documentation, they will issue a license for the Section 8 company. This license allows the NGO to commence operations officially.

Compliance and Reporting Requirements

After successfully registering your NGO under Section 8, it is crucial to adhere to the compliance and reporting requirements mandated by law. This includes:

1. Annual Filings

Section 8 companies must file annual returns and financial statements with the Registrar of Companies. Failing to comply with these requirements can lead to penalties and even the cancellation of the license.

2. Maintaining Books of Accounts

NGOs must maintain accurate and transparent books of accounts, reflecting all financial transactions. Regular audits may be required to ensure compliance with financial regulations.

3. Conducting Meetings

It is mandatory to hold regular meetings of the board of directors and maintain minutes of these meetings. This practice enhances transparency and accountability within the organization.

Conclusion

Understanding the NGO registration under Section 8 process is crucial for anyone looking to establish a non-profit organization in India. With the right knowledge and preparation, you can navigate the registration process effectively and set up a credible organization dedicated to social welfare.

At Seedling Associates, we are committed to supporting your journey in establishing your NGO. Our team of experts is here to guide you through every step of the registration process and ensure that you comply with all legal requirements. For more information and assistance, visit Seedling Associates today. Let's work together to make a difference in society.