Section 8 companies are those companies which are formed for the sole purpose of promoting commerce, art, science, religion, charity or any other useful object and have been granted a license by the central government recognizing them as such. Such companies should intend to apply its profits, if any or other income only in promoting its objects and must also prohibits payment of dividend to its members.Thus there are three criteria for determining whether a particular company is section 8 company or not:
1. Its objects should be only to promote commerce, art, science, religion, charity or any other useful object.
2. It should intend to apply its profits or other incomes only in promoting its objects; and
3. Central government should have granted a licence to such a company recognizing them as such, these types of companies can be either public company or private company having a limited liability.
Steps to be taken to get incorporated a Section 8 Company
Step - 1 Apply for Digital Signature Certificate
Digital Signature Certificate for Directors of a Company, both Indian and foreigners, are also required to get Digital Signature Certificate - DSC - under the new requirements. Digital Signature Certificate (DSC) is required for all Directors who will require to sign ROC forms or documents. A DSC, like hand written signature, establishes the identity of the sender filing the documents through internet which sender cannot revoke or deny.
Step - 2 Apply for Directors Identification Number (DIN No.)
Directors of Company, must register and get and identification number under the new requirements. It is called Director Identification Number (DIN No.)
Step - 3 Apply for the availability of the name
The next step is to decide the name for the proposed Company to be incorporated. Anyone intending to incorporate an Company has to evaluate his proposed name under the prescribed parameters and make an application in eForm 1A for reservation of the desired name.
The name of the Company shall not be similar or identical with that of a Company or Company already registered in India. The details to be state in the eform 1A are as follows : 1. Six alternative names for the proposed Company. 2. Name, addresses and DIN of Directors 3. Description of proposed business activity.
Step - 4 Drafting the Memorandum and Articles of Association. (in triplicate).
On receipt of the name approval letter from the ROC the MOA & AOA required to be drafted. Its Contents include: 1.Name 2.Name of Directors 3.Rights and Duties of Directors 6.Proposed Business 7. Rules governing the Company
Step - 5 obtaining a Declaration signed by an Advocate / Chartered Accountant / Company Secretary on non-judicial stamp paper of appropriate value.
Step - 6 The proposed sources of income and the expenditures thereof.A note on the proposed activities and also the past activities, if any.
Step - 7 Declaration signed by all the promoters on non-judicial Stamp Paper of appropriate value.
Step - 8 obtaining a license for a Section 8 Company, for which Form 24 A is to be filed in order to obtain a license for such company.
Step - 9 File the documents for Registration:
Once, name is allotted and receiving the license / approval form Government,company registration documents have to be prepared and filed with respective ROC for registration. The following documents and Form filed with After receiving the license / approval an application is to be made to the Registrar of Companies (ROC) along with following documents:1. Printed copy of the Memorandum and Articles of Association., 2.The license granted by the Regional Director.,3.One copy of Form 1, 4.One copy of Form 18, 5.Two copies of Form 32 6.The requisite amount of fees.
All the eForms shall be digitally signed by any Director and shall be certified by an Advocate/ CA/CS/CWA in practice engaged in the formation of the Company
After the Registrar is satisfied that all formalities are complied with, he issues a Certificate of Incorporation as to the formation of the Company within a 7 days of filing eForms and will issue a Certificate of Incorporation , which shall be conclusive evidence as to the formation of the Company.
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