Section 8 Company Registration

Section 8(1) of the Companies Act 2013 permits a licence where the company's objects include promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment, or any other useful object. The objects must be explicitly drafted to preclude distribution of surplus to members, and all income must be applied exclusively toward the stated objects. Rule 19(3) of the Companies (Incorporation) Rules 2014 requires that the draft MoA be attached with Form INC-12 for the Regional Director's scrutiny. Broadly commercial objects, even if structured as non-profit, will not satisfy the RoC and may lead to rejection of the licence application.

A Section 8 Company can receive foreign contributions only after obtaining registration under Section 11 of the Foreign Contribution (Regulation) Act 2010 (FCRA) in Form FC-3A, or prior permission under Form FC-3B for a specific donation before registration is obtained. The company must have a dedicated FCRA-designated bank account with the SBI Main Branch, New Delhi, as mandated under Rule 9 of the Foreign Contribution (Regulation) Rules 2011. FCRA registration requires at least three years of existence and a track record of cultural, educational, or charitable activity. Receiving foreign funds without FCRA registration attracts prosecution under Section 35 of FCRA 2010.

A Section 8 Company wishing to receive CSR contributions from companies mandated under Section 135 of the Companies Act 2013 must register on the MCA portal by filing Form CSR-1, effective April 1, 2021 as per the Companies (Corporate Social Responsibility Policy) Amendment Rules 2021. The form requires the company's CIN, 12A/12AB registration details, and details of the implementing agency. Upon successful submission, an MCA-generated CSR Registration Number (starting 'CSR') is issued. Corporates are required to verify this CSR Registration Number before channelling funds, and the implementing Section 8 Company must report utilisation in its own annual report alongside the CSR-2 form filed by the donor company.

Yes, conversion is possible under Section 8(4)(ii) of the Companies Act 2013 with prior approval of the Central Government by filing an application in Form INC-18. The Central Government will impose such conditions as it deems fit, including payment of taxes on accumulated reserves that were exempt during the non-profit period, since those reserves will lose their exempt character under Section 11 of the Income Tax Act 1961 upon conversion. The 12AB and 80G registrations are automatically cancelled from the date of conversion. Practically, conversion is rare and RoC scrutiny is high; dissolution and fresh incorporation is often the cleaner path.

Under the Finance Act 2020, all charitable entities must obtain fresh registration under Section 12AB of the Income Tax Act 1961 — prior 12A registrations did not auto-convert. A newly incorporated Section 8 Company files Form 10A for provisional 12AB registration within three months of incorporation, and the Commissioner of Income Tax (Exemptions) grants provisional approval valid for three years per Rule 17A of the Income Tax Rules 1962. Before expiry, the entity files Form 10AB for regular registration, which requires three years of audited accounts and a factual report by the CIT. Regular registration is valid for five years and renewable. During the provisional period, the company's income applied to objects is exempt under Section 11(1)(a).