What is Section 8 Company (NGO Registration)? What is the procedure for registration?

In India, a non – profit organization often known as NGO can be registered as a Company under Section 8 of the Companies Act, 2013 (erstwhile Section 25 of the Companies Act, 1956) and can also be registered as Trust and as a Society registered under the provisions of Society Registration Act, 1860. Section 8 Company form of a NGO is most popular form of NGO in India. It is easy to register, run or manage a Section 8 Company in comparison of a Trust and a Society.

According to Section 8(1a, 1b, 1c) of the Companies Act, 2013, a Section 8 company can be established for ‘promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided it ‘intends to apply its profits, if any, or other income in promoting its objects’ and ‘intends to prohibit the payment of any dividend to its members.

In India, the Company registration is regulated by the Indian Companies Act, 2013 (and the amendments thereof) and rules & regulations made thereunder and is administered by the Ministry of Corporate Affairs, Government of India (MCA- Ministry Of Corporate Affairs) through the Offices of Central Registry Central, Manesar, Gurgaon in the National Capital Region of Delhi. The process for incorporating a Section 8 Company in India is mentioned below in detail:

Digital Signature Certificate (DSC) & Director Identification Number (DIN)

DSC and DIN for all the proposed Directors of the Company must be obtained. Digital Signature is the only secure and authentic way that a document can be submitted electronically. All filings of e-forms on MCA Portal are required to be filed with the use of Digital Signatures by the person authorised to sign the documents. For Obtaining Digital Signature application needs to be made, to licensed Certifying Authority (CA) along with a self attested copy of Proof of Identity & Proof of Address.

For obtaining DIN an application in Form No. DIR – 3 should be filed on MCA Portal. DPIN application is processed and approved by the Central Government through the office of Regional Director, Ministry of Corporate Affairs. Form No. DIR – 3 must be accompanied by self attested copy of PAN, Proof of Identity and a Proof of Address and one recent passport size colour photograph of the Applicant. Pan card is mandatory for Indian Nationals. All the documents must be attested by a practicing professional viz. practicing Company Secretary, Practicing Cost & Management Accountant, or practicing Chartered Accountant.

Name Approval

Name approval has to be obtained from the Registrar of Companies ["RoC"] by submitting an application in Form No. – INC 1. The Applicant can give maximum six names in order of preference. The name once approved by the authority is valid for sixty days. The Promoter /Subscriber to the Memorandum and Articles of Association shall be the applicant for the availability of name application. The name once approved by the authority is valid for 3 months. Name approval generally takes 1 business days.

Memorandum and Articles of Association

After obtaining name approval, the draft Constitutional Documents of proposed Company i.e. Memorandum of Association (MOA) and Articles of Association (AOA) is to be drafted and then filed with the RoC along with other documents in eForm INC 12 for issuance of license under section 8 of the Companies Act, 2013.

After obtaining name approval, the draft Constitutional Documents of proposed Company i.e. Memorandum of Association ('MOA') and Articles of Association ('AOA') of the company is to be drafted and then filed with the RoC along with the forms and other necessary documents stated below.

Subscription Pages of MOA & AOA – Memorandum and articles of association of the company shall be signed by each subscriber to the memorandum who shall mention his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, description and occupation, if any. The witness shall be a practicing professional viz. practicing Company Secretary, Practicing Cost & Management Accountant, or practicing Chartered Accountant.

In the case of foreign subscriber the above documents should be attested by the Consulate of the Indian Embassy in the respective Country or by foreign public notary. In case of wholly owned subsidiary, a copy of the Board resolution of Holding Company approving the investment in the proposed Indian Company and authorizing a person to sign the incorporation papers on behalf of the company, duly attested by the officer of the Indian Embassy in the foreign country where the registered office is situate is also required to be attached with the papers.

In addition to Memorandum and Articles of Association and its subscription pages, few other documents such as Affidavits, Consent Letters, Certificate of Compliance from a practicing professionals in Form No INC – 8, etc. will be prepared and filed with the incorporation forms.

Filing of Forms for issuance of license under section 8 of the Companies Act, 2013)

The following forms are required to be filed with the RoC:

eForm INC 12 (for issuance of license under section 8 of the Companies Act, 2013). This application shall be accompanied by:

• Memorandum & Articles of Association of the proposed company;
• A declaration confirming the application by a Company Secretary in Practice on the Non – Judicial stamp paper of prescribed value;
• List of names, descriptions, addresses & occupation of the promoters as well as Board Members of the proposed company;
• A statement showing details of assets and liabilities of the company as on date with the application;
• An estimate of future annual income and expenditure of the proposed company, specifying the source of income and object of expenditure;
• A statement giving brief description of work, if any, already done by the association;
• A statement specifying briefly the grounds on which the application is made;
• A declaration in prescribed form on non – judicial stamp paper by each person making an application;
• A letter of authority;

After all the papers for obtaining license are filed and reviewed by the RoC, the RoC may require certain clarifications before issuance of license under Section 8 of the Companies Act, 2013. These clarifications or enquiry need to be satisfied by the person who has been authorised to do so by the Power of Attorney filed with the RoC or by the applicant.

Once the INC 12 is approved the, a license under Section 8 of the Companies Act, 2013 is issued and then applicant is required to file following forms/documents in order to obtain Certificate of Incorporation.

Filing of Incorporation Forms on MCA Portal

The following forms are required to be filed with the RoC after issuance of license to receive Certificate of Incorporation:

• e-Form SPICE 32 (Company registration application and an application for issuance of PAN & TAN);
• e-Form SPICE 33 (e Memorandum of Association);
• e-Form SPICE 34 (e Articles of Association); and

A Power of Attorney to be executed by subscribers and proposed directors (authorisation by the promoters of the company to a person/s to carry out appropriate changes as suggested by the RoC in any of the incorporation papers that have been filed).

Clarifications/Additional Information Required By ROC:

After all the incorporation papers are filed and reviewed by the RoC, the RoC may require certain clarifications. These clarifications or enquiry need to be satisfied by the person who has been authorised to do so by the Power of Attorney filed with the RoC.

Certificate of Incorporation

Once all clarifications are provided, the Certificate of Incorporation is issued by the Registrar of Companies along with a unique Company Identification Number (CIN) and the Company is deemed to be incorporated from the date of the Certificate of Incorporation. Once the Certificate of Incorporation is issued, Company may apply for PAN, TAN, Bank Account Opening and other tax and regulatory registration as may be required to run the business smoothly.

Bank Account Opening and Remittance of Subscription Money

After incorporation, a Bank Account in the name of newly incorporated Company shall be opened by the Board of Directors and the Subscribers of Memorandum and Articles of Association of the Company shall deposit their subscription money in such bank account to help the company raise initial capital to start its business.

Minimum Requirements registering a Section 8 Company

• Minimum two shareholders;
• Minimum two Directors (Directors and shareholders can be same person);
• At least one Director shall be resident in India;
• No Minimum capital required;
• Income-tax PAN is a mandatory requirement in case of Indian nationals;
• Proof of Identity (Voter ID/Aadhar Card/Driving License/Passport); Passport is mandatory requirement for proof of identity in case of foreign nationals;
• Proof of Residential Address of Promoters (Electricity Bill/Telephone Bill/Mobile Bill/Bank Statement);
• Registered Office address proof (rent agreement along with latest rent receipt and copy of latest utility bill in the name of landlord and a no objection certificate from the owner of the premises, in case the premises are rented);
• In case the premises are owned by a Director and Promoters, any documents establishing the ownership such as Sale Deed/House Tax receipt etc along with the no objection certificate;
• E-mail IDs, Mobile Numbers, Educational Qualifications of all promoters;
• Two Passport size colour photographs all promoters.

These days section 8 companies can be registered on fast track basis in 15 business days time only.