Section 8 company or NGO company can be formed for charitable purpose after getting license from Registrar of Companies. These companies can be private limited or public limited and liability of members being limited by shares or by guarantee.
A company can be registered for charitable purposes with the object of charity and not having motive of making any profits. These companies are basically registered under section 8 of Companies Act, 2013.
These companies are generally called Section 8 companies and are formed to promote Commerce, Science, Art, Religion, Charity or other socially useful objectives. This form of NGO can’t have profit motive and shall not pay dividend to it’s members but apply the surplus of receipts over payments for promotion of its objectives.
These companies need not use the words Limited or Private Limited after their name and are generally registered with limited liability with or without capital. Such companies can be private or public. For Public minimum 7 members are required and for private minimum 2 members have to be there.
Company name need to be approved by MCA by applyingthe same in SPICE- A
On Approval of Company Name; –
The First Step to obtain Digital Signatures of Directors and all Proposed Subscriber.
Other Information required: –
– Detailed Objects to be pursued
– Projected Income and Expenditure / Assets and Liabilities for 3 years
– Memorandum and Articles of Association
– E mail ID and Mobile Number of Subscribers and Directors.
– Latest Bank Statement or utility bill for current residence proof.
On approval of Application, Certificate of Incorporation shall be issued by the Registrar of Companies.
Section 8 company can only be formed for the purpose for promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment and the profit can not be distributed among the members.
Majority of cases, section 8 company will be a company limited by guarantee not having share capital. The liability of members only arose at the time of winding up of the company.
Section 8 company name need not end with the word “Limited” or “Private Limited”.
Section 8 company can only be formed after getting license from Registrar of Companies.
Director Identification Number is an identification number allotted to Directors of a Company or Designated Partners of an LLPissued by the Ministry of Corporate Affairs, Government of India
- DSC is a legally recognised method of signing documents electronically. A digital signature is a type of asymmetric cryptography used to simulate the security properties of a handwritten signature on paper. Digital signature schemes normally give two algorithms, one for signing that involves the user's secret or private key, and one for verifying signatures that involves the user's public key. The output of the signature process is called digital signature.
- Memorandum Of Association is the charter document of a company. Section 8 NGO MOA contains the name of a company, the state in which the registered office of the company is located, objects, and its authorized capital. The MOA will be subscribed by the initial promoters of the company digitally.
Articles of Association is the bylaws of a company and can be filed along with the incorporation document. AOA contains rules and regulations for the management of a company's internal affairs and conduct of its business. It defines the relationship of company between its members and directors and relation between members and directors. It also describes powers of directors.
- Registered Office refers to the official correspondence address of a company or its principal place of business. The address of the Registered Office will be used for all official communications of the company. Registered Office of the company can be shifted from one place to another in the same state or from one state to another after complying with legal requirements. The company shall affix the name and address of its registered office outside every office or place of business in a prominent position. Also, the name and address of its registered office should be mentioned in its business letters, bills and other official publications.
The Companies Act, 2013 do not prohibit activities outside India. The FEMA and FCRA are silent in this regard and under the liberalized regime of RBI, current account transactions are allowable without any prior permission. Therefore, there should not be any problem in transfer of foreign exchange, subject to the guidelines of FEMA. The most important legislation in this context is the Income Tax Act, which under section 11(1)(c), prohibits the activities of Indian NGO outside India without specific permission of the CBDT. An Indian NGO spending money on activities outside India will be subject to income tax on that portion of its income.
- No, section 8 company name need not end with limited as last last world. This is an exemption given by companies act to section 8 company as such type of company is formed for charitable or non profit motive business