Are you passionate about bringing changes in a community to encourage art, education, and other social activities? For such activities that benefit the community, the NGO works on a big level. Establishing an NGO (Non-Governmental Organization) is the strongest way to bring change. To establish an NGO in India, it is necessary to register the organization under a legal framework, specifically as a Section 8 company. Through the NGO Section 8 company registration, the entrepreneur can work for society.

By forming a Section 8 company, you not only connect to the general public but also gain numerous advantages. In this comprehensive guide, we will explore how entrepreneurs can apply for NGO company status, including the memorandum drafting procedure, at a lower cost. 

What is a Section 8 Company Registration?

The Section 8 company registration online in India registers under Section 8 of the Companies Act, 2013. Unlike the general companies, such non-profit companies are established for a purpose that benefits society. In the other companies, the profits are used by the shareholders, but a Section 8 company is formed with a major objective to promote charitable and non-profit operations. It is established to promote commerce, art, science, sports, education, social welfare, religion, environmental protection, or any other useful objective.

If this company gains profits, it doesn’t share them among the members or shareholders. The profit is used back into the organization for further needs. Registering a development business, Section 8 registration can be the ideal choice for social entrepreneurs. 

Why Section 8 Registration is Best for NGO?

Forming an NGO in India under Section 8 of the Companies Act, 2013, provides the following advantages: 

Enhanced Credibility: Section 8 companies are registered under the Companies Act, which automatically enhances their legal recognition among the public. The legal tag further boosts the client’s trust and creates a strong bond between the supplier and the receiver. For the CRS funding, this legal structure is often preferred by the partners as well as the donors. Due to a transparent legal framework, the government agencies further show their trust in providing loans to such companies. 

Tax Benefits: This advantage makes the Section 8 company registration the most selected choice by entrepreneurs. It exempts various taxes to run the non-profit company smoothly. To utilize the tax advantage, complete the 12A registration. This registration is required to exempt the income of the NGO from taxation. It significantly works to raise the funds for further activities. 

Minimum Capital Requirement: For the Section 8 company incorporation, there is no minimum required paid-up capital. Restricting the capital requirement makes the registration process more accessible and approachable. 

Limited Liability: The members of a nonprofit company, like an NGO, can run the activities without worrying about their personal assets. The legal framework of Section 8 offers protection against limited liability. It determines that the financial wealth of members is safeguarded and will not be affected by financial risk. 

Separate Legal Entity: Like the other companies, an NGO under the Companies Act, 2013, is also defined as a separate legal entity. It is separated from its owner, which allows it to own property and enter into contracts. 

Perpetual Succession: The Section 8 company legal structure guarantees perpetual succession. It means it will continue even if the members or shareholders leave, die, or have another reason. 

Also Read: Start Section 8 Company Registration Today and Finish in 15 Days

The Procedure for Registering an NGO Company

Several important steps are included for the NGO Section 8 company registration. For the newer registration for the section as an NGO, it can seem complex, but the expertise of professionals can simplify it. 

Step 1: Legal Structure

For the formation of an NGO in India, the applicant is required to select the right legal structure. Consider how you want to register your NGO as a trust, society, or Section 8 registration. For an online company registration, register under the Companies Act, 2013, which is governed by the MCA. 

Step 2: Obtain DSC and DIN

 All members who are going to take the seat of directors are required to obtain the Digital Signature Certificate (DSC) and Director Identification Number (DIN). With the use of DSC, the proposed directors can fill out the documents online through DSC. While DIN acts as a unique identification card for the directors, it is required during registration. 

Step 4: Name Approval Application

Selecting a distinctive name for your NGO represents another vital step. For your Section 8 company, you must seek name approval via the RUN form. Register the name approval application on the MCA portal. Before submitting the application, you must ensure that the proposed name is not similar to any existing company. The selected name is in such a way that it reflects the NGO’s objectives. 

Step 4: Drafting the  (MoA) and  (AoA)

For the Section 8 registration, we need to draft these two documents.

  • Memorandum of Association (MoA): The MoA is the major document for company incorporation. It is required to highlight the fundamental role of an NGO. It outlines the company’s objectives and scope. To file the MoA, use the Form INC-13. 
  • Articles of Association (AoA): Similar to the Memorandum of Association, the Articles of Association is an essential document. This document mentions the rules and regulations of a nonprofit company, which are required to govern it. It further determines the responsibilities of members or shareholders. It also demonstrates the duties and the meeting procedure, including how and who will make the decisions. 
  • Free Memorandum Drafting: To draft the MoA for free, contact a professional service that offers assistance. Often, the service of a professional includes the free memorandum drafting, which is the core of the Section 8 company registration. The assistance of the professionals can save time as well as streamline the online company registration steps. 

Step 5: Apply for NGO License

To regulate a NGO section 8 company registration, the business is required to obtain a license from the Central Government. The license is required before the company incorporation. To obtain it, use the Form INC-12. Accompanying the form are the required documents, which include the Articles of Association (AoA) and the Memorandum of Association (MoA). Provide the income statement and a declaration from a CA or CS. 

Step 6: Obtain PAN and TAN

Following the successful online business registration of a Section 8 company in India, one should proceed to apply for a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN). Both will be issued by the Registrar of Companies (ROC) with a Certificate of Incorporation. 

Step 7: Open a Bank Account

After securing the PAN and TAN with CoI, apply to open a bank account in the name of the NGO. With this business bank account, you need to handle all the transactions.

Step 8: Other Registration

After the company’s incorporation as an NGO, the applicant is required to register for GST (Goods and Services Tax) or FCRA (Foreign Contribution Regulations Act). Each registration is contingent upon the specific nature of the NGO.

Final Words |  Section 8 Microfinance Company Registration

A Section 8 company is a type of nonprofit company that is established for a specific reason. To apply for an NGO, you are required to register with the Ministry of Corporate Affairs (MCA). To navigate the company incorporation process, understand the rules and regulations, meet requirements, and ensure the accuracy of documents. The assistance of professionals can make the registration process more streamlined and accessible. Get in touch with the experts of Company Registration Online who assist you throughout the NGO Section 8 company registration in India.

Frequently Asked Questions

1. How can I confirm whether my NGO is registered or not?

Ans. If the NGO is a trust or society, check on the state registrar or the charity commissioner’s website. If your NGO is registered with the Section 8 registration legal framework, visit the MCA online portal. 

2. How can I establish an NGO without the money?

Ans. To establish an NGO in India without investing an amount, one needs to follow a strategic plan. Also, understand the legal requirements to avoid extra costs, and also that effective fundraising can be the best move. 

3. What makes a Section 8 company suitable for an NGO?

Ans. A Section 8 company, which is a not-for-profit company, utilizes the exemptions of tax exemptions under the IT Act. 

4. Which type of NGO registration is best?

Ans. In India, Section 8 registration is considered the most selected and ideal legal structure for NGO formation.

5. Under which act is the NGO registered?

Ans. To establish an NGO, it is necessary to register under the Companies Act of 2013.