How to form NGO/ Non Profit Making Company in India

Formation of Non Profit making Company:

When someone thinks to form NGO or Society or Trust or Section 8 Company (Earlier Section 25 Company), there come in mind various doubts, which is better, how to form, what are the minimum Requirements, documents required, etc. We have illustrated the idea to form Section 8 Company as per Companies Act 2013. I hope this will help you understand the concept in deep.

Meaning of Section 8 Company:

A Company which has main objective as Promotion of arts, science, commerce, sports, education, religion, charity or such other objectives, uses its profit for promotion of its objectives and doesn’t pay any dividend to its members. In simple words it is a Company with no intention to make a profit.

Who can form a Section 8 Company?

Any individual or association of persons can form a Section 8 Company.

How many people/ persons are required to form section 8 Company?

Minimum 2 people are required to set up a Section 8 company.

How to Register a Section 8 Company?

To register a section 8 company in India, the process is similar to the registration of other companies (Private Limited/ Public Limited) (except an additional license from RD (Regional Director) is required). 

Important point to be noted that Section 8 company cannot be formed in fast track in eForm INC 29

Procedure to register Section 8 Company:

1.    Obtain Digital Signature: It is compulsorily required to Obtain a  Digital Signature Certificate from authorized DSC issuing Company for at least one director to sign the E-forms related to incorporate like Form DIR 3, form INC.1 and other documents.

Documents Required:

-       PAN Card copy duly attested by Banker/ Gazetted Officer

-       Address Proof duly attested by Banker/ Gazetted Officer

-       Signed DSC Form affixed photo on it

2.    Obtain Director Identification Number: every individual intending to be appointed as director of a company shall make an application for allotment of Director Identification Number in form DIR.3 to the Central Government in such form and manner and along with such fees as may be prescribed.

Documents Required:

-       Self attested PAN

-       Self attested Address Proof

-       Passport Size colored photograph

3.    Name availability for proposed company: Name approval has to be obtained from the Registrar of Companies ["RoC"] by submitting an application in eForm INC 1. The name once approved by the authority is valid for 60 days. The Subscriber to the Memorandum and Articles of Association shall be the applicant for the availability of name application.

4.    License under section 8 for new companies with charitable objects: A person or an association of persons desirous of incorporating a company with limited liability shall make an application in Form No.INC.12,along with the prescribed fee, to the Registrar for a license under sub-section (1) of section 8.

Main attachments of Form INC.12 would be as follows:

(a)  The draft Memorandum of Association of the proposed company.

(b)  The draft Articles of Association of the proposed company.

(c)  The declaration in Form No.INC.14 by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in practice,

(d)  The declaration by each of the persons making the application in Form No. INC.15.

(e)  An estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure

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