Incorporation of a Section 8 Company Under Companies Act, 2013

Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company

(a) Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(b) Intends to apply its profits, if any, or other income in promoting its objects; and

(c) Intends to prohibit the payment of any dividend to its members,

the Central Government may issue licence on such conditions as it deems fit. [Section 8(1)]

Points to be kept in mind before incorporation of a Section 8 Company:

  • 8 Co. can only be incorporated as a Limited Company.
  • Decide regarding the proposed name to be applied, objects to be carried by the Company, proposed registered office address, authorized capital, number of promoters, number of directors, and number of shares to be subscribed by each promoter.
  • The name of the company should be in consonance with the principal objects of the company as set out in the memorandum of association. Every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum. [Rule 8(2)(b)(ii) of Companies (Incorporation) Rules, 2014]
  • The proposed name should not fall in the ambit of undesirable names specified in Rule 8 of Companies (Incorporation)Rules, 2014
  • Name of Section 8 Company shall include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral trust and the like words. [Rule 8(7) of the Companies (Incorporation) Rules, 2014]
  • Objects of Section 8 Company must be the promotion of Commerce, Art, Science, Sports, Education, research, social welfare, religion, Charity, protection of environment or any such other object [Section 8(1)(a)]
  • It should intend to apply its profits, if any or other income in promoting its objects. [Section 8(1)(b)]
  • It should intend to prohibit the payment of dividend to its members. [Section 8(1)(c)]
  • No need to add the word Limited or Private Limited to its name.[Proviso to Section 4(1)(a) and Section 8(1)]
  • License from Central Government is required to be taken. (Section 8(1)
  • A partnership firm is allowed to be a member of the Section 8 company [Section 8(3)]
  • Section 8 company shall enjoy all the privileges and be subject to all the obligations of limited companies. [Section 8(2)]
  • There must be at least 2 or 3 subscribers to the memorandum in case company is proposed to be incorporated as private company or public company respectively. [Section 3(1)(a) and Section 3 (1)(b)]
  • Minimum number of Directors required is 2 Directors or 3 Directors, in case company is proposed to be incorporated as private company or public company respectively with a maximum limit of up to 15 Directors. A Company may appoint more than 15 directors after passing a special Resolution in a general Meeting. [Section 149(1)(a) (b)]
  • Section 8 company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.[(Section 149(3)]
  • All the Directors should have valid DIN. (In case the proposed directors dont have a Director Identification number (DIN) allotted to them, Pl. Ref. procedure for DIN Application.)
  • Digital Signature for any one of the Director is required to digitally sign the E-Forms to be submitted with the Registrar of Companies.

KNOW MORE PROCEDURE FOR INCORPORATION OF A SECTION 8 COMPANY :- https://lexcomply.com/3i0w

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Incorporation of A Private limited Company

lexcomplySection 2 (68) states that a private company means a company having a minimum paid up share capital as may be prescribed, and which by its articles:

  1. restricts the right to transfer its shares;
  1. limits the number of its members to two hundred;
  1. prohibits any invitation to the public to subscribe for any securities of the Company:

Points to be kept in mind before incorporation of a Private Limited Company:

Decide regarding the proposed name to be applied, objects to be carried by the Company, proposed registered office address, authorized capital, number of promoters, number of directors, and number of shares to be subscribed by each promoter.

The name of the company should be in consonance with the principal objects of the company as set out in the memorandum of association. Every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum. [Rule 8(2)(b)(ii) of Companies (Incorporation) Rules, 2014]

The proposed name should not fall in the ambit of undesirable names specified in Rule 8 of Companies (Incorporation)Rules, 2014

The Company must have a minimum Paid up Share Capital as may be prescribed. [Section 2 (68)]

There must be at least 2 subscribers to the memorandum. [Section 3(1)(b)]

Maximum number of members allowed is 200 members [ section 2(68)]

Minimum number of Directors required is 2 Directors with a maximum limit of up to 15 Directors. A Company may appoint more than 15 directors after passing a special Resolution in a general Meeting. [Section 149(1)(a) (b)]

Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.[(Section 149(3)]

Restrictive provisions given under definition of Private Company [Section 2(68)] should be taken care of and be included in the Drafting of Memorandum and Articles of Association of Company.

All the Directors should have valid DIN. (In case the proposed directors don’t have a Director Identification number (DIN) allotted to them, Pl. Ref. procedure for DIN Application.)

Digital Signature for any one of the Director is required to digitally sign the E-Forms to be submitted with the Registrar of Companies.

Know More: – Procedure for Incorporation of Private Limited Company