Month: August 2019

Incorporation of Section 8 Company

Another Simplified Incorporation

As an initiation of simplifying the incorporation procedures, recently the Central Government interlinked PAN, TAN, GST, ESIC, PF registration and various other registrations along with SPICe and AGILe forms. Now from this 73rd Independence day, another simplification of Section 8 Company by obtaining License number through SPICe form itself.

In this edition we will be seeing about the new incorporation procedure for Section 8 Company. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.

CEO Saranya Deivasigamani,
CEO

Incorporation of Section 8 Company

As a process of further simplification of incorporation of Companies and to further integrate the incorporation procedures into single window approval process, the Central Government in it’s notification dated 7th June, 2019 proposed the Companies (Incorporation) Sixth Amendment Rules, 2019 which came into force on 15th August, 2019.

Key Highlights of the Amendment

  1. Requirement of prior filing of INC-12 for new section-8 companies is being dispensed with vide the Companies (Incorporation) Sixth Amendment Rules, 2019 dated 7th June, 2019.
  2. Section 8 Companies can be incorporated by either reserving names through Run and filing SPICe thereafter or by directly filing SPICe. Licence No.for a section 8 company will be allotted at the time of incorporation itself.
  3. All pending INC-12 SRNs for new Companies pending at respective RoCs would be marked as ‘Rejected’ on 15th August 2019. Such applicants may thereafter directly file SPICe for obtaining Licence Number and for incorporation of Section 8 Companies.
  4. Those who have already obtained License Numbers and are yet to file SPICe form for incorporating Section 8 companies may do so at their convenience but the forms shall be processed only after a certain time lag to allow for work flow changes to take effect.
  5. Those who have already filed SPICe forms which are pending at CRC may await processing of these forms after the work flow changes take effect.

Incorporation Procedure in effect

Name Approval

The name approval can be obtained by filing web based Reserve Unique Name (RUN) Form or trough SPICe Form INC-32 along with submission of other forms.

Ministry of Corporate Affairs has revised Rule 8 of the Companies (Incorporation) Rules, 2014 on 10th May 2019 in the Companies (Incorporation) Fifth Amendment Rules, 2019. The revised name rules shall be checked before making any application for company name reservation in RUN or SPICe. The complete text of the revised Rule 8,  Can be accessed by clicking here.

As per the revised rules, the proposed name of a section 8 company under the Act should include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust and the like, etc.

Through RUN form, an applicant can apply upto 2 names in a single form. IWhereas, in SPICe form, the applicant can apply upto only 1 name in a single form.

No resubmission will be allowed for RUN form and SPICe form will carry it’s own resubmission limits allowed in normal course of approval.

An approved name through RUN is valid for a period of 20 days from the date of approval.

Licence and Incorporation Documents

The license and incorporation documents shall be applied through SPICe Form INC-32.

Mandatory Attachments:

  • Memorandum of Association (in pdf format)
  • Articles of Association (in pdf format)
  • Declaration by first subscribers and first directors
  • Proof of address
  • Interest of first directors in other entities.
  • Declaration in form INC-14
  • Declaration in form INC-15

Notes to Remember:

SPICe MOA INC-33 and SPICe AOA INC-34 is not applicable and the MOA and AOA has to be given as mandatory attachment in the SPICe form itself.

Any other information can be provided as an optional attachment (like INC-9 and INC-10). A separate declaration in format of INC-8 is not required to be attached.

Registration under Income Tax

Section 8 Company shall start registration under Section 12AA of the Income Tax Act, 1961 as soon as obtaining Certificate of Incorporation from ROC and obtaining bank account number under form 10A along with following documents:

  • Incorporation documents—Licence from Central Government, Certificate of Incorporation, MOA, AOA.
  • Declaration u/s 13 (1)(c) of the Income Tax Act.
  • Notes specifying the main activities.
  • NOC from the owner of the premises where the registered office is situated.
  • Proof of address and identity of subscribers and directors.
  • Undertaking under the 1st proviso to section 2(15) of the Income Tax Act, 1961.
  • Details of bank account.
  • Details of donations received / made since inception. Along with list of donors and their PAN.
  • List of activities conducted since inception and proposed to be carried out for next 3 years.
  • Copy of Annual Reports since inception.

 

80G application shall immediately follow 12AA approval and FCRA application can be made after 3 years of existence and has undertaken reasonable activity in its chosen field for the benefit of the society for which the foreign contribution is proposed to be utilized.

Legal Terms

Illusory Promise 

n. an agreement to do something that is so indefinite one cannot tell what is to be done or the performance is optional (usually because it is just a gesture and not a true agreement).

NewsBites

MCA Updates

SEBI Updates

RBI Updates

IT Updates

  • No major updates.

GST Updates

  • No major updates.