Companies Act 2013 | CA B K Goyal & Co LLP

A Section 8 Company is a non-profit organization that aims to promote charitable activities, art, science, education, and sports. The profits of such companies are utilized for promoting these objectives and are not distributed among the Company’s members. Section 8 company is incorporated with an object to promote commerce, art, science, sports, research, education, religion, protection of environment, charity or any other object, who intends to apply their income and profits in promoting their objects and prohibits the payment of dividend to its members. Section-8 Company can be incorporated as a Private or Public Company. Section 8 Companies are similar to a Trust or Society as the Societies and Trusts are registered under the State Government regulations whereas Section 8 Company is registered under the Central Government’s “Ministry of Corporate Affairs (MCA)”. Being recognized centrally Section-8 Companies/NPOs have higher credibility amongst the stakeholders and donors. Key Points about Section 8 Company In India, Non-Governmental Organizations (NGOs) can be registered under the Registrar of Societies or as a non-profit entity under Section 8 Company of the Companies Act, 2013. Profit generated by Section 8 Companies cannot be used for purposes other than charitable objectives and cannot be distributed among shareholders. Section 8 Companies are similar to the erstwhile Section 25 Company under the Company Act 1956. As per the prevailing Company Act, these are now recognized as Section 8 Companies. Section 8 Companies are required to comply with the provisions of the Companies Act 2013. They are mandated to maintain books of accounts, file returns with the Registrar of Companies (ROCs), and comply with GST and IT Act. Any changes to the charter documents like the Articles of Association (AoA) and Memorandum of Association (MoA) require the government’s consent. Advantages of Section-8 Company Tax Exemption- Section 8 companies registered under section 12AA of the Income Tax Act are eligible for a 100% tax exemption, as they utilize their profits for charitable purposes. This is a significant benefit as the profits generated by such entities are non-taxable. No Minimum Capital Requirement- Unlike public limited companies, Section 8 entities do not have a minimum capital requirement. They can adjust their capital structure according to their growth, giving them more flexibility. Separate Legal Entity-Section 8 companies have a separate legal identity and perpetual existence, just like other registered companies. This increases their credibility and provides them with more autonomy and legal standing. Increased Credibility- Section 8 companies are subject to strict legal compliance frameworks, enhancing their credibility regarding legal standing. Unlike NGOs and trusts, Section 8 entities follow stringent compliances post-registration, making them more trustworthy. No Title Required- Section 8 companies are free to choose a name that suits their liking during the registration process. Unlike other registered structures, they are not required to affix the term “Section 8” after their name. A Section 8 company in India offers numerous benefits, including tax exemption, no minimum capital requirement, no need to pay stamp duty, separate legal identity, increased credibility, and no title required. These advantages make Section 8 companies attractive for entrepreneurs looking to start a business with a charitable or social cause. Eligibility Criteria for Incorporation of the Section 8 Company Specific eligibility criteria must be met to establish a Section 8 company in India. An Indian national or Hindu Undivided Family (HUF) can incorporate a Section 8 Company. The entity must have at least one director. The primary object of the Section 8 Company should be related to promoting art and science, sports, charitable activities, education, or providing financial assistance to individuals from lower-income groups. These eligibility criteria ensure that the Section 8 Company operates to promote social welfare and contribute to the greater good of society. Documents Required for Section 8 Company Registration Identity Proof of the Member and Directors of the proposed Company;(Aadhar /Voter ID/Driving License/Passport) Address Proof of the Members and Directors (Utility Bill/Telephone Bill/Mobile Bill/Bank Statement not older than two months) Latest passport size photograph of Member and Directors Business Address ProofOwned Property : (Copy of Registry and Latest Govt. Electricity Bill or Water Bill) Business Address ProofRented/leased: Rent Agreement, NOC from the Owner, Latest Govt. Electricity Bill or Water Bill) PAN Card of the Member and Directors of the proposed CompanyPassport in case of Foreign Nationals Section 8 Company Incorporation Process Step 1: Obtain Digital Signature Certificate (DSC) The first step is to obtain a Digital Signature Certificate (DSC) for the proposed directors of the Section 8 Company. This certificate is required for the online filing of documents with the Ministry of Corporate Affairs (MCA). Form DIR-3 is used for obtaining the DIN and should be filed along with the DSC of the proposed directors. Forms to be used: DIR-3, DSC Step 2: Obtain Director Identification Number (DIN) After obtaining the DSC, the next step is to apply for a Director Identification Number (DIN) for the proposed directors. The DIN number is a unique identification number issued by the MCA to individuals who wish to be directors of a company in India. Forms to be used: DIR-3 Step 3: Reserve the Company Name The next step is to reserve the name of the proposed Company with the MCA. The Section 8 company name should be unique and not be similar to any existing company name. Form INC-1 is used for reserving the company name. Forms to be used: INC-1 Step 4: File the Application for Incorporation After the company name is approved, the next step is to apply for Section 8 Company incorporation. The application for incorporation is filed in Form INC-32 along with the Company’s Memorandum of Association (MOA) and Articles of Association (AOA). Forms to be used: INC-32, MOA, and AOA Step 5: Obtain a License for Section 8 Company Once the application for incorporation is approved, the next step is to obtain a license for the Section 8 Company. Form INC-12 is used for obtaining the license. It should be filed along with the necessary documents. Forms to be used: INC-12 Step 6: Obtain a Certificate of Incorporation After obtaining

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The Insolvency and Bankruptcy Board ofIndia (Annual Report) Rules, 2018

Companies Act 2013 / CA Bhuvnesh Goyal / April 3, 2024

MINISTRY OF CORPORATE AFFAIRSNOTIFICATIONNew Delhi, the 1st May, 2018 G.S.R. 422(E).—In exercise of the powers conferred by clause (zm) of sub-section (2) of section 239read with sub-section (1) of section 229 of the Insolvency and Bankruptcy Code, 2016 (No. 31 of 2016), theCentral Government hereby makes the following rules, namely:—1. Short title and commencement.- (1) These rules may be called the Insolvency and Bankruptcy Board ofIndia (Annual Report) Rules, 2018.(2) They shall come into force on the date of their publication in the Official Gazette.¹Hkkx IIµ[k.M 3(i)º Hkkjr dk jkti=k % vlk/kj.k 32. Definitions:(I) In these rules, unless the context otherwise requires, —(a) “Code” means the Insolvency and Bankruptcy Code, 2016 (31 of 2016);(b) words and expressions used in these rules but not defined, and defined in the Code shall have themeanings respectively assigned to them in the Code.3. Form of Annual Report.- The Board shall prepare its annual report, giving a true and full accounts of itsactivities, policies and programmes, during the previous financial year in the Form annexed to these rules.4. Time of furnishing of the Annual Report.- The Board shall submit a copy of the annual report referred toin rule 3 to the Central Government within ninety days of the end of the financial year.Form of the Annual Report[see rule 3](A) Chairperson’s statement:(B) The year in review:(C) A true and full account of policies, programmes and activities of the Board in respect of-(i) Service Providers, namely, Insolvency Professionals, Insolvency ProfessionalAgencies, and Information Utilities:(ii) Transactions, namely, Corporate Insolvency Resolution, Corporate Liquidation,Individual Insolvency Resolution and Individual Bankruptcy:(iii) Advocacy and Awareness:(iv) Research:(D) A review of the quasi-legislative, executive and quasi-judicial functions of the Board:(E) An analysis of outcomes in terms of transactions and transactional efficiencies:(F) Summary data – time series or cross section – as may be relevant and available, about theoutcomes that may facilitate appreciation of the working of the Code and the Board andpromote research:(G) Impact of the Code on credit market, resource recycling and the economy:(H) An assessment of the effectiveness and the efficiency of the Board in terms of its objectivesand mandate keeping in view its resources, duties and powers:(I) An assessment of performance of the Governing Board and its vision, policies andprogrammes for the following year:(J) A summary of financial performance of the Board;(K) A statement of non-compliance, if any, with statutory obligations by the Board and the reasonfor the same;(L) Organisational Matters, including Human Resources, Finance and Accounts, AuditCommittee, Right to Information and Transparency:(M) Such other details as would enable the stakeholders to review and appreciate the performanceof the Board: [F. No. 30/13/2018-Insolvency]GYANESHWAR KUMAR SINGH, Jt. 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