Todo sobre la constitución de empresas sin ánimo de lucro (empresas de la sección 8) en la India

Section 8 companies, i.e., Non-profit organisations (NPO) is quite a famous concept. As the name itself depicts, companies incorporated without any profit motive but are formed with the motive of promotion of arts, environment, sports, science etc. are incorporated under Section 8 of Companies Act.

If you ask experts: Why should non-profit organisations adopt company structure? The answer will include low formation cost, exemption from stamp duty, tax benefits under section 80G, separate legal entity from its founders, more credibility in society, etc. Then, the next question will be how one can register a section 8 company in India.

This article in FAQ format will provide an answer to your question.

1.   Who is eligible to create a section 8 company

• An individual or Association of Individuals are eligible to form Section 8 companies if it carries the objective of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
• Such an objective is required to be proved to the Central Government.
• Section 8 company can be incorporated either as private limited company or public limited company. 

2.   What are the restrictions put on a section 8 company

A section 8 company once registered cannot do the following:

• Distribute its profits as dividend among its members; or
• Apply its profit or income in any objective other than promotion of its own objectives.
• Alter the memorandum of association (MOA) or articles of association (AOA). However, with the special resolution and Central Government’s approval, MOA or AOA can be altered.
• Amalgamate with any other type of company. However, it can amalgamate with another section 8 company.

3.   What are the minimum requirements to create a section 8 company

Following are the minimum requirements for creation of section 8 company:

1. Minimum number of members: A minimum of 2 or 3 persons are required to incorporate a section 8 company.
2. Minimum number of directors: A minimum of 2 directors are required for incorporating a section 8 company.
3. Minimum capital: As a part of ease of doing business initiative, the Government of India has removed the requirement of minimum capital for incorporation of a section 8 company

4.   What documents and forms are required to incorporate section 8 company

According to the section 8 of Companies Act, 2013 read with the Companies (Incorporation) Rules, 2014, a person or group of persons desirous of forming section 8 company should keep the following documents ready for incorporation process:

1. MOA and AOA
2. Declaration by an advocate, Chartered Accountant (CA), Company Secretary (CS) stating that MOA and AOA have been drawn up in accordance with provisions of section 8 of the Act and rules made thereunder.
3. Declaration on stamp paper by each applicant and should be duly notified.
4. Correspondence address till finalisation of registered office or address for registered office.
5. Name and address with documentary evidence of directors and subscribers to MOA
6. Passport size photographs of directors.
7. DIN and DSC of all directors.
8. Rent agreement, if applicable or utility bill (owned property) in respect of registered office.
9. Self-declaration by first subscribers and consent of directors
10. An estimation of the company’s future annual income and expenditure for the next three years.

After collecting all documents at one place, a professional can be approached to comply with legal formalities for incorporation for submission of following forms with the Registrar on MCA portal:

Upon successful submission of all forms and verification of such forms by the Registrar, the certification of incorporation will be issued to the company.

5. What are annual compliances to be made by a section 8 company

Post incorporation, a section 8 company is bound to follow all the rules and regulations applicable to a company in India except in cases where any exemption or relaxation available to it. Therefore, every year, section 8 company has to:

1. Maintain books of account and prepare financial statements for a financial year.
2. Get the books of account audit from external auditors.
3. Maintain statutory registers and records.
4. Conduct a minimum of two board meetings every year.
5. Get the board report from the board of directors to be attached with financial statements.
6. Conduct an annual general meeting in a year.
7. File income tax return for every financial year relevant to the current assessment year.
8. File annual return in MGT-7.
9. Disclosure of interest by every director in the first board meeting of every financial year.
10. Spend the two per cent profits classifying them as CSR expenditure in case its profit exceeds INR 5 crore or turnover exceeds INR 1000 crore or net worth exceeds INR 500 crore in a financial year.
11. Event based compliances like filing of MGT-14 on passing of special resolution, etc.
12. Other compliances pursuant to registration under section 12AA and 80G.

6.   What are the exemptions available to a section 8 company

Various exemptions/ relaxations are provided to a section 8 company in rules and regulations of the Companies Act, 2013. The list is enumerated as under:

1. Las empresas de la sección 8 no están obligadas a añadir «Private Limited» o «Limited» a su nombre.
2. Se otorga flexibilidad al Consejo para predeterminar la fecha, hora y lugar de la Junta General Anual si los accionistas han dado instrucciones al respecto en la junta general.
3. El plazo para notificar una junta general en el caso de una empresa de la sección 8 puede ser de 14 días. De lo contrario, el periodo de preaviso requerido es de 21 días completos.
4. El número de directores puede aumentarse por encima de 15 sin necesidad de aprobar una resolución especial en el caso de una empresa de la sección 8.
5. No es necesario nombrar directores independientes en una empresa de la sección 8.
6. Cualquier persona que ostente más de 20 cargos de dirección puede ser director en una empresa de la sección 8.
7. Una empresa de la sección 8 no está obligada a nombrar un Secretario de la Sociedad.
8. No existe el requisito de crear un comité de nombramientos y retribuciones en una empresa de la sección 8.
9. El consejo de administración de una empresa de la sección 8 puede aprobar asuntos relacionados con el préstamo de dinero, la inversión de fondos, la concesión de préstamos o la prestación de garantías o avales respecto a préstamos mediante circulación.
10. Los directores interesados en un contrato o acuerdo pueden participar en las reuniones si el valor de dicho contrato o acuerdo no supera el lakh.
11. Una empresa de la sección 8 en la que el gobierno central o uno o más gobiernos estatales, o ambos, posean el 26% o más del capital social desembolsado, puede conceder préstamos sin intereses para financiar proyectos de I+D industrial en cumplimiento de sus objetivos, tal como se establece en su acta de constitución (MOA).

7.   What are the consequences of violation of provisions by section 8 company

Two types of consequences will occur on violation of provisions, one is facing penalty and another one revocation of licence.

Licence of section 8 company will be revoked in case objectives are conducted fraudulently or objectives are violated.

On making defaults in compliances of the provisions of the Companies Act, 2013,-

• The company will face fine of INR 10 lakh which may extend to INR 1 crore ; and

• The directors and the officers of the company will have to bear a fine of INR 25,000 which may extend to INR 25 lakh.