Section 8 of the Companies Act 2013 relates to forming and regulating companies with charitable objects or not-for-profit companies. This section lays down the rules and procedures for registering and functioning such companies in India.

Here are some of the key features of Section 8:

• The main objective of a Section 8 company must be the promotion of charitable, religious, educational, scientific, or other similar purposes, and not the generation of profit.
• The name of a Section 8 company must include the words "Foundation," "Association," "Society," "Council," "Charity," "Institute," "Organization," or other similar words, as may be prescribed by the rules.
• The procedure for incorporation and registration of a Section 8 company is similar to that of any other company, with some additional requirements, such as obtaining a license from the Registrar of Companies.
• A Section 8 company is eligible for various tax exemptions and benefits, subject to compliance with certain conditions.
• A Section 8 company must apply its profits or other income solely to promote its objectives and not distribute dividends to its members.
• The Board of Directors of a Section 8 company must consist of at least two individuals who shall act as trustees. The company may also have a governing council or a managing director or manager, as prescribed by the rules.
• A Section 8 company is required to file annual returns and comply with other statutory requirements, similar to any other company registered under the Companies Act 2013.

Overall, Section 8 of the Companies Act 2013 provides a legal framework for establishing and functioning non-profit organizations in India to promote charitable, social, and cultural activities for the benefit of society.

Procedure for Incorporation of Section 8 Company:

The procedure for incorporation of a Section 8 company in India is as follows:

• Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN): The first step is to obtain DSC and DIN for all the proposed directors of the company.
• Name approval: The company's proposed name needs to be approved by applying the prescribed Form SPICe+, along with the required fees.
• Memorandum of Association (MoA) and Articles of Association (AoA): Prepare and file the MoA and AoA of the company in the prescribed format.
• License application: Apply for a license from the Registrar of Companies (ROC) in the prescribed Form INC-12, along with the required fees and documents.
• Incorporation application: Once the license is obtained, file an application for incorporation in the prescribed Form SPICe+ along with the required documents and fees.
• PAN and TAN application: Apply for the company's Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
• Certificate of Incorporation: If the Registrar of Companies is satisfied with the documents and information provided, the Certificate of Incorporation will be issued to the company.

Some important points to keep in mind while incorporating a Section 8 company are:

• The company must have a minimum of two directors and two shareholders.
• The MoA and AoA of the company must follow the provisions of the Companies Act 2013 and the rules made thereunder.
• The company must aim to promote charitable or social welfare activities, and its profits must be used solely for these activities.
• The company cannot declare dividends to its shareholders.
• The license for a Section 8 company is valid for five years and can be renewed after that.

Annual, quarterly, and monthly compliance for a Section 8 company:

A Section 8 company is required to comply with various statutory provisions of the Companies Act 2013 and rules made thereunder on an annual, quarterly, and monthly basis. Some of the critical compliance requirements are as follows:

Annual compliance:

• Annual General Meeting (AGM): The company must hold an AGM within six months from the end of the financial year (i.e., by 30th September each year).
• Financial statements: The company must prepare and file its financial statements, including balance sheet, profit, loss account, and cash flow statement, with the Registrar of Companies (ROC) within 30 days from the date of the AGM.
• Annual return: The company must file its annual return in the prescribed form with the ROC within 60 days from the date of the AGM.
• Audit: The company must get its accounts audited by a chartered accountant and file the audit report with the ROC.

Quarterly compliance:

• Board meetings: The company's board of directors must meet at least once every quarter.
• Income tax return: The company is required to file its income tax return for each quarter by the due date.

Monthly compliance:

• GST return: If the company is registered under GST, it must file its GST return every month.
• TDS return: If the company is required to deduct TDS, it must file its TDS return every month.
• Other compliance: The company must also comply with various other statutory provisions, such as labor laws, environmental laws, and other regulations applicable to its business.

A Section 8 company needs to ensure timely compliance with all these statutory provisions to avoid penalties and legal issues. The company may appoint a professional or secretary to ensure proper compliance with all the statutory requirements.

Alteration of memorandum and articles of association:

A Memorandum of Association (MoA) and an Article of Association (AoA) are the two essential documents that govern the activities of a company. Alteration of these documents may become necessary for a company when it decides to change its objectives or any other provisions mentioned in these documents. The process for alteration of the MoA and AoA of a company is as follows:

• Board resolution: The first step is to pass a board resolution to propose the company's alteration of the MoA or AoA.
• Notice to members: The company must send a notice to all its members, directors, and auditors at least 21 days before the general meeting date.
• General meeting: The company is required to hold a public meeting to pass a special resolution for the alteration of the MoA or AoA of the company. A special resolution requires the approval of at least three-fourths of the members present in the meeting.
• Filing of the form: The company must file the necessary documents with the Registrar of Companies (ROC) within 30 days of passing the special resolution. The forms include Form MGT-14, which must be filed with the ROC to approve the alteration.
• ROC approval: The ROC will examine the application and may approve the alteration subject to compliance with the Companies Act 2013 provisions, and the rules made thereunder.
• Certificate of incorporation: If the ROC is satisfied with the documents and information provided, it will issue a certificate of incorporation with the altered MoA or AoA of the company.

It is important to note that any alteration of the company's MoA or AoA should follow the Companies Act 2013 and the rules made thereunder. Additionally, the alteration should not be against the interest of the company or its members and should be done in good faith.

Conversion of a Section 8 company into a company of any other Company:

A Section 8 company can be converted into any different kind of company by following the provisions of the Companies Act 2013 and the rules made thereunder. The process for conversion of a Section 8 company into any other kind of company is as follows:

• Board resolution: The first step is to pass a board resolution to propose converting the Section 8 company into any other company.
• Approval of members: The company must obtain its members' approval by passing a special resolution in a general meeting. A special resolution requires the approval of at least three-fourths of the members present in the meeting.
• Application to ROC: The company must file an application with the Registrar of Companies (ROC) in the prescribed form, along with the necessary documents and fees.
• Approval of ROC: The ROC will examine the application and, if satisfied, will issue an order approving the conversion.
• A fresh certificate of incorporation: Once the conversion is approved, the company must obtain a fresh certificate of incorporation from the ROC, which will indicate the new name and the type of the company.
• Compliances: The company must comply with all the requirements applicable to the new type of company, including changes to its Memorandum of Association (MoA), Articles of Association (AoA), and other documents.

It is important to note that converting a Section 8 company into any other kind of company may impact its tax status. The company may have to apply for new approvals or registrations. The company may also have to comply with additional compliances, such as filing tax returns, financial statements, and other regulatory requirements, as applicable to the new type of company.

Advantages of Section 8 Company:

Section 8 companies, also known as non-profit companies, are formed to promote charity, education, science, religion, social welfare, sports, or any other useful object. The main advantages of Section 8 companies are as follows:

• Tax benefits: Section 8 companies are eligible for tax exemptions under various sections of the Income Tax Act 1961. These exemptions include exemption from income tax, exemption from the capital gains tax, and exemption from tax on income received from property held for charitable purposes.

• Limited liability: Members of Section 8 companies enjoy limited liability, which means their assets are protected in case of any legal proceedings against the company.
• Credibility: Section 8 companies are registered with the Ministry of Corporate Affairs; hence, they have more credibility than other non-profit organizations. They are also required to follow various compliance requirements, which increases their transparency.
• Perpetual succession: Section 8 companies have a separate legal entity, and they continue to exist even if their members change or the original members cease to exist.
• Access to funding: Section 8 companies can receive funding from various sources, including donations, grants, and loans. They can also apply for funding from government schemes and programs.
• Easy registration: The registration process for Section 8 companies is relatively simple and easy. The company can be registered with the Registrar of Companies (ROC) quickly.

Overall, Section 8 companies are a good option for individuals or organizations who wish to contribute to society and promote social welfare. They offer several benefits and incentives to promote their objectives. However, it is essential to note that Section 8 companies are subject to various compliance requirements, which can result in penalties and legal proceedings.

Landmark judgments of Section 8 Company Act:

The Section 8 Company Act 2013 is a relatively new legislation, and there have been few landmark judgments on this Act. However, some of the notable judgments on Section 8 companies are as follows:

• In Re Foundation for International Taxation (2015): This case dealt with the issue of whether a Section 8 company can be considered a charitable organization for the purpose of claiming tax exemptions. The Bombay High Court held that Section 8 companies could be regarded as charitable organizations if they are formed to promote charity, education, science, religion, social welfare, or any other useful object and if their income is used solely for these objects.
• Aditya Birla Science and Technology Company Limited v. Union of India (2018): This case dealt with the issue of whether a Section 8 company can claim an input tax credit under the Goods and Services Tax (GST) regime. The Gujarat High Court held that Section 8 companies could claim an input tax credit if they supply goods or services during their business.
• Satya Bharti Foundation v. State of Punjab (2018): This case dealt with the issue of whether a Section 8 company can be considered a "person" to file a writ petition under Article 226 of the Constitution. The Punjab and Haryana High Court held that Section 8 companies could be considered "persons" to file a writ petition if any state action aggrieves them.

These judgments provide some clarity on the interpretation and implementation of the Section 8 Company Act and highlight the importance of complying with the various provisions of the Act.

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