Q. What is the main objects for which a Section 8 company can be registered?

Ans. A person can form a section 8 company in India as per the objects given below, these activities should be for non profit (NGO activities):

• Promotion of commerce, art, science, sports, education, research, and social issues like social welfare, religion, charity, protection of the environment or any other social object is also included
• Payment of Dividend to the members should be prohibited by the company.
• Profits of company will be only used in promoting above objects only.
• The income of the Company must be used to promote only charitable objects etc.

Q. What is the summarized process for incorporation of Section 8 company?

Ans. Now a days license under section 8 is getting issued by government from a all in one MCA form Spice+. To incorporate a Section 8 Company, Spice+ need to be filed with legal documents as applicable to sec 8 company with digital signatures of all directors.

Q. What is the Income Tax Benefits for Section 8 Company?

Ans. Section 8 Company is a non-profit organization that is why they are exempted from some provisions of the income tax. Such company can apply with IT department for exemption under Section 80G & 12AA whereby donors may claim a 50% rebate against donations made to the company. Company can avail the all benefit as available to a trust/NGO registered u/s 80G/12AA.

Q. Whether name of Section 8 company should includes (suffix) word like Foundation, Forum, Association, Federation etc.?

Ans. Yes. Companies incorporated under Section 8, should include the words like foundation, Forum, Association, Federation etc. and the like other word as applicable to an NGO.

Q. Whether a Section 8 Company can be incorporated both as Private and Public Limited Company?

Ans. Yes, it is the applicant’s choice to incorporate a Section 8 Company as a private or public limited Company after meeting the relevant compliance requirement. In case of section 8 company is formed as private then minimum 2 person are required and If this is formed as public then minimum 7 persons are required to get registered. 

Q. What is the minimum time required to register a private limited company?

Ans. Around 2 to 7 working days subject to govt approvals and providing all documents.

Q. What is the main advantages of Section 8 Company?

Ans. Section 8 company can enjoy the following benefits:

• No counting of directorship in section 8 company for maximum no of directorship as per section 165.
• Not mandatory to appoint Independent director.
• Bonus Shares cannot be issued.
• No restriction on payment remuneration to employees/director.
• Section 135 of CSR is applicable.
• FDI in Section 8 Companies can be taken subject to FEMA.
• No specific exemption to Section 8 Company from GST or TDS etc.
• CARO is not applicable.
• Zero stamp duty on AOA & MOA

Q. Whether a Section 8 Company can receive FDI (Foreign Direct Investment) in India?

Ans. Yes, a section 8 company can receive FDI as per FEMA regulations.

Q. What is minimum annual compliance for a section 8 company?

Ans. Company has to file mandatory annual filing forms ADT-1 (Auditor appointment), AOC-4 (financial statement), MGT-7 (annual return). Other applicable forms may be MBP 1, DIR 3 KYC, Form 22A, Form DPT 3 etc. which will get applicable as per nature of transactions in company.

Q. Can Section 8 Companies receive contributions/donations from overseas or non-residents?

Ans. There are special requirements to be complied with under the Foreign Contribution and Regulation Act, 2010 (FCRA) before a Section 8 Company can receive any contributions or donations from overseas/outside India from non-residents. The provisions of the said Act are in addition to the provisions under the Companies Act 2013. 

Q. Can section 8 companies be a holding company of another company?

Ans. Yes, section 8 company can promote another company and be a holding company of another company

Q. Whether Section 8 Companies are required to appoint a Resident director?

Ans. Yes, section 8 company is required to have at least one director who has stayed in India for a total period of not less than 182 days within the previous calendar year.

Q. What are the reliefs and benefits available to a Section 8 Company under the provisions of Foreign Contribution (Regulation) Act, 2010? Whether registration is required under FCRA?

Ans. Section 8 Company can register under FCRA to receive funds from foreign source. Registration under FCRA is mandatory for availing such benefits.