An NGO, or Non-Governmental Organization, is an entity dedicated to non-profit and charitable endeavors. When established as a Section 8 company under the Companies Act, 2013, it falls under the governance of the Ministry of Corporate Affairs (MCA). Conversely, NGOs registered as trusts or societies operate under the jurisdiction of the state government’s registrar.
Choosing Section 8 company registration offers more advantages compared to trust and society structures. This particular company type enjoys greater credibility with government departments, donors, and other stakeholders. This article will guide you through the process of registering as an NGO in the form of a Section 8 Company under the Companies Act, 2013.
When establishing a Section 8 Company, it is essential to acquire the Digital Signature Certificate (DSC) for the designated Director. Following the document submission, the applicant must undergo the OTP and E-KYC procedures to obtain the DSC in their name.
Benefits of Section 8 Company Registration
There are many advantages of registering an NGO under Section 8 of the Companies Act, 2013, which are as follows:
- Eligible for grant and donations
- Exemption to the donors
- Tax Benefits
- Separate Legal Entity
- No Minimum Capital
- Credibility
- Section 8 License
Purpose of NGO – Section 8 Company Meaning
The primary aim of forming a company as a Section 8 company is to advance non-profit goals, including but not limited to:
| Commerce | Art | Science |
| Sports | Education | Research |
| Social Welfare | Religion | Charity |
| Protection of environment | Any such other object related to the above objects |
The profits/incomes of the Section 8 company, if any, are applied towards promoting the objectives of the company and are not distributed as dividends to its shareholders.
Laws in India applicable to an NGO
NGOs in India have the option of being registered under the following legal frameworks:
- Trust as per the Indian Trusts Act, 1882
- Society in accordance with the Societies Registration Act, 1860
- Section 8 of the Companies Act, 2013
Minimum requirements for Section 8 Company registration
- For the incorporation of a Section 8 company as a private limited company, a minimum of two directors is necessary.
- If incorporating as a public limited company, a minimum of three directors is required.
- It is mandatory for at least one director to be a resident of India.
- A registered office address must be provided.
- The company’s objective should exclusively be for charitable or social purposes.
- Sharing profits among shareholders is prohibited.
Documents required for Section 8 Company registration
- Directors’ DSC (Digital Signature Certificate) and DIN (Director Identification Number).
- Company’s objectives and proposed operational initiatives.
- Financial statements, including assets and liabilities, along with a five-year projection.
- Personal documents of the directors.
- Documents for the registered office address, such as a rental agreement or sale deed in the company’s name, and utility bills not exceeding two months in age.
