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Section 8 Microcredit Company Registration
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Section 8 Microcredit Company Registration

Complete assistance during company formation.
Market research and lending model planning.
End-to-end assistance in application with RBI.
Compilation of various documents and filing of online application for registration
Generation of the Business plan and compliance support post-registration

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    Overview of Section 8 Company

    To give easy credit to people belonging to the marginal class of society who are traditionally considered unsuitable for lending, microcredit companies were established. These companies increase financial inclusion by giving small credit to small and medium enterprises and people belonging to the lower-income group.  

    NGOs intending to serve the small income group of society by lending small loans can be registered as Section 8 companies under the Companies Act 2013 or as a trust under the Trusts Act 1882. They can also register under the Societies Act 1860. Section 8 company registration is the incorporation process of such NGOs under the Companies Act 2013. 

    These companies can be registered with an objective to promote Science, Commerce, Art, Technology, Sports, Social Research, Education, Social Welfare, Charity, Religion, and Environment protection. Section 8 companies are allowed to work anywhere after completion of the registration process.

    Benefits of Section 8 Company Registration

    There are various advantages of obtaining Section 8 company registration under the Companies Act 2013. Let’s understand them in the following section.

    Tax Benefits: Section 8 companies are eligible to avail various tax-related benefits.
    No Minimum Capital Requirement: There is no limit on minimum capital required for set up of these companies for registration as the microcredit company.
    No Payment of Stamp Duty: If you are willing to register your firm as a Section 8 company, then you won’t be required to pay stamp duty on company incorporation. It is against the provision of payment on the AoA and MoA of the private limited company.
    It is a separate legal entity and acquires its legal identity from the members.
    Exemptions for Donors: These NGOs can register under Section 80G which give the donors of the NGO exemption from tax. This attracts more donations for the organisation.
    Credibility: These companies have more credibility than other types of charitable organisations as these are audited every year due to the provisions of the Companies Act.

    Eligibility Criteria for Section 8 Company Registration

    The following are minimum criteria that need to be met by an NGO willing to register as a Section 8 company.

    Any individual, Limited Company, a HUF is eligible to start a Section 8 Company.
    Two or more than two people who act as a shareholder or director must fulfill all the requirement of the compliances for the Section 8 company.
    At least one director of the Section 8 Company must be a citizen of India.
    The objective of Section 8 Company must be the promotion of Science, Art, Sports, social welfare, or giving financial assistance to small income groups.
    If any surplus donation generated, then it must be used in fulfillment of the primary objective of the company.
    Members, founders, directors cannot withdraw any numeration (indirectly or directly) from the company.
    The company must have a project plan and a vision for the next 3 years.
    Document Required

    Documents Required For Section 8 Company Registration

    Here is a quick checklist of documents required to start the procedure of Section 8 company registration.

    DINs of directors of the Company.
    Digital signatures certificates of the Directors.
    Certificate of company’s name registered with RoC.
    Copy of Article of Association and Memorandum of Association.
    Copy of resolution by the company’s board stating its objectives.
    Company’s business plan for the next three years.
    List of documents mentioning details of the directors and promoters.
    Any other relevant documents as required at the time of company incorporation.

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      Procedure for Section 8 Company Registration

      Start by preparing the digital signature certificate of the directors. If the directors do not have DSCs, then they should apply ASAP.
      The name of the company must include the words like Foundation, Association, Society, Council, Charities, Club, organisation, Academy, Federation, Chamber of Commerce, Institute, Development, etc.
      Apply to the Regional Director, MCA (INC-12) for Section 8 Company registration. The Regional Director of the area will review all the documents submitted, objectives and plans of the company for the next three years and based on that will accept or reject the application. Generally, the Regional Director’s office takes 15 days to complete the process of issuing the license for Section 8 Company.
      After getting Regional director’s approval, the company must file the Section 8 application on the MCA portal to get the Company Incorporation Certificate (CIN) from the Registrar of Company (RoC).
      The company must file the MoA and AoA with objectives of the company mentioned on it.
      The company should also file their TAN, PAN, and bank account details to RoC at the time of registrations.

      Compliances to be Followed Section 8 Company

      The company must conduct at least two board meeting per year.
      Preparation of annual financial statements of the company.
      Annual maintenance of book of accounts.
      Mandatory audit of financial accounts and statements of the company.
      Income tax return filing for non-exempted income.
      Filing financial statement in AOC 4 form.
      An annual return must be filed with other e-filing forms.
      Additional compliances to be fulfilled if the company is registered under Section 12A and 80G.

       

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      Frequently Asked Questions on Mutual Funds Company Registration

      NGOs intending to serve the lower-income group of society by lending small loans can be registered as Section 8 companies under the Companies Act 2013 or as a trust under the Trusts Act 1882. They can also register under the Societies Act 1860.

      The objective of Section 8 Company must be promotion of Science, Art, Sports, social welfare, or giving financial assistance to small income groups.

      • At least two board meeting must be conducted per year. 
      • Preparation of annual financial statements.
      • Annual maintenance of book of accounts.
      • Mandatory audit of financial accounts and statements. 
      • Income tax return filing for non-exempted income. 
      • Filing financial statement in AOC 4 form. 
      • Filing annual return with other e-filing forms.
      • Additional compliances related to Section 12A and 80G.

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