CS NISHA SARAYAN
Section 8 Companies (Registration and Role in CSR)
A company can be referred as section 8 company which has get itself registered as charitable or not for profit organization and has obtained certificate of license from Central Government. Nonprofit organizations provide a platform where there can be direct links between the society and its well being for its development. Its main purpose is to promote non-profit objectives such as trade, commerce, art, charity, religion, environment protection, social welfare, education etc.
An Individual or an Association of individuals are eligible to be registered as section 8 company if it-
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;
Intends to apply its profits, if any, or other income in promoting its objects; and
Intends to prohibit the payment of any dividend to its members.
Role of Section 8 companies in CSR implementation-
Ministry of corporate affairs Companies Act, 2013 has introduced the concept and provision of mandatory Corporate Social Responsibility (CSR) for certain companies. CSR introduced as a tool to achieve sustainable development goals and give back to the society from company utilize various resources.
Section 135 of companies act contains provisions for CSR for prescribed companies.
The CSR spending can now be met by the company itself or through-
· Any non-profit entities either established by the corporate (singly or jointly with others) or independently established entities registered under section 12A and section 80G of the Income Tax Act.
· A section 8 company, registered trust or a registered society established by central government or state government.
· A Section 8 Company, a registered public trust or a registered society registered under Section 12A and 80G of the Income Tax Act, 1961 and that does not fall within the above categories, but such entity must have an established track record of at least three years in undertaking similar programs or projects.
Eligible entities mentioned above who intends to undertake any CSR activity shall register itself with central government by filing the form CSR-1 electronically with Registrar to be digitally signed by authorized person of NGO and a practicing professional.
Thus section 8 companies can play a vital role in CSR implementation and undertake various CSR activities.
Benefits of Section 8 company-
· For incorporating a section 8 company there is no minimum requirement of authorized or paid up share capital.
· Such companies are exempted from stamp duty registration.
· A partnership firm can be a member in its own capacity.
· Such companies are eligible for tax deductions to the donors of the company u/s 80G of the Income Tax Act.
· Eligible for CSR.
Steps for incorporation-
1. Name Reservation:-Reserve a name for the company by filing SPICE + PART A in MCA website along with its object. The name shall include words like foundation, trust, federation, council etc. It must be noted that the name should not include the word “limited” or “private limited” in it.
2. Once the name gets approved it is reserved for 20 days where we can proceed further.
3. Obtain DSC- After the name gets approved, obtain DSCs of first directors and subscribers.
4. SPICE + PART B- Now proceed to file SPICE + PART B form where following attachments are required:-
· Physical copy of Memorandum of Association(INC 13)
· Physical copy of Articles of Association
· Declarations by professionals(INC 14)
· Declarations by directors(INC 15)
· Estimated Income & Expenditure Account for the next three years.
· Grounds of Application & Work proposed to be done
· PAN Card of Director & Subscribers.
· ID Proof of Directors & Subscribers- Voter id Card/ Driving License/Passport
· Address Proof of Directors & Subscribers- Bank statement/ Mobile bill/ Telephone bill (not older than 2 months).
· Photographs of directors & subscribers.
· Proof of address of registered office.
· NOC from owner( in case of rented property)
· Electricity bill not older than 2 months.
NOTE:- Every subscriber shall sign the subscriber pages of MOA & AOA of the company along with his name, address, occupation in the presence of atleast one witness who shall attest his signature along with his name, address and occupation.
5. AGILE PRO-Proceed to file the AGILE PRO form where following services can be availed-
· Mandatory issue of EPFO Registration
· Mandatory issue of ESIC Registration
· GST Registration(optional)
· Opening of Bank Account for the company.
6. INC9- It is web based generated form and need only DSC of directors to be affixed.
7. Download all the web based forms and attach DSCs of relevant directors as required.
8. Once the forms are ready with the applicant, upload all the forms as linked form on MCA portal.
9. MCA will approve it and issue Certificate of Incorporation.
10. Central Government will issue license in INC 16 as section 8 company.
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