How does a section 8 company get its licence?
A section 8 company gets its licence from the Central Government, exercised by the Registrar, as part of incorporation. The licence papers are filed with SPICe+. The certificate of incorporation and the licence are issued together. Applying in Form INC-12 after the certificate is the old process.
When is the licence issued?
The memorandum states the objects in section 8: commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection. The company intends to apply its profits to those objects and not to pay a dividend. The name uses a word such as Foundation, Association, or Society, as the licence allows, and may omit Limited or Private Limited. What the memorandum must contain is on the memorandum page. The filing set is on the documents page and the service is on the section 8 page.
A subscriber who does not already have a director identification number takes it inside SPICe+, not by a separate DIR-3 in every case. PAN and TAN are allotted with the certificate. They are not a second application after incorporation.
Who can form it?
A private section 8 company needs at least two members and two directors. A public section 8 company needs at least seven members and three directors. There is no minimum paid-up capital. The company may be limited by shares or by guarantee. A one person company cannot be a section 8 company. A foreign company is a different question, on the foreign-company page.
What does the licence not give?
The licence does not exempt income. Registration under the income-tax provisions for a charitable institution, and approval for a donor’s deduction, are separate applications. Whether the surplus is taxed is on the tax page. Stamp on the memorandum and articles is not waived. Permission to receive a foreign contribution is a separate statute, not a line on the licence. If the company pays a dividend or leaves the objects, the licence can be revoked and the omitted word is added back to the name.
Frequently asked questions
Four questions cover the old form, income tax, stamp, and the minimum number of directors.
Is the licence applied for after the certificate?
No. The licence papers go in with SPICe+. The certificate and the licence are issued together. Form INC-12 after incorporation is the old process.
Does the licence exempt income?
No. An exemption under the Income-tax Act is a separate application. The licence only authorises the company to pursue the objects and to apply its profits to them.
Is stamp duty waived?
No. Stamp on the memorandum and articles is a state charge. The licence does not cancel it.
Can a public section 8 company have two directors?
No. A private section 8 company needs at least two directors and two members. A public section 8 company needs at least three directors and seven members.
Sources
The licence is section 8 of the Companies Act, 2013. It is applied for with incorporation. The papers are on the documents page.