Laws in India applicable to an NGO
NGOs can be registered in India under any of the following laws:
a. Trust under Indian Trusts Act, 1882
b. Society under Societies Registration Act 1860
c. Section 8 Company under Companies Act, 2013
Purpose of NGO - Section 8 Company
The main purpose of establishing a company as a Section 8 company is to promote non-profit objectives such as trade, commerce, arts, charity, education, religion, environment protection, social welfare, sports, research, etc. The profits/incomes of the company if any, are applied towards promoting the objectives of the company and are not distributed as dividends to its shareholders.
A minimum of two directors is required if the Section 8 company is to be incorporated as a private limited company, and a minimum of three directors in case of incorporation as a public limited company. The maximum number of members is 200 in case of a private limited company, whereas for a public limited company, there is no such limit.
Also, there is no requirement of minimum paid-up capital in case of a Section 8 company.
Pre-Requisites to the Registration Process
a. Obtain DSC (Digital Signature): Digital signatures of the proposed directors of the company are required as the forms for registration process are filed online and should be digitally signed. Digital signature certificates (DSC) are issued by government recognized certifying agencies. The list of such certified agencies can be accessed here. The cost of obtaining a DSC varies depending upon the certifying agency. You must obtain either a Class 2 or a Class 3 category DSC. Under the Class 2 category, the identity of a person is verified against a pre-verified database, whereas under the Class 3 category, the person needs to present himself before registering authority to prove his/her identity.
b. Apply for Director Identification Number (DIN): You have to apply for a DIN for the proposed directors of the company. The application for allotment of DIN has to be made in Form DIR-3. You have to attach the scanned copy of the necessary documents such as a self-attested copy of PAN, Identity and Address proof of directors along with the form and submit it online on the MCA Portal. The form must be attested by a practicing professional who can be a chartered accountant, a company secretary, or a cost accountant.
Forms Required for Registration
|Name of the form||Purpose of the Form
|INC 1||Name Approval|
|INC 7||Application for Incorporation of Company|
|INC 9||Affidavit from each director and subscriber|
|INC 12||Application for License|
|INC 13||Memorandum of Association|
|INC 14||Declaration from a practicing Chartered Accountant|
|INC 15||Declaration from each person making the application|
|INC 16||License to incorporate as Section 8 company|
|INC 22||Situation of Registered Office|
|DIR 2||Consent of Directors|
|DIR 3||Application to ROC to get DIN|
|DIR 12||Appointment of Directors|
Purpose of the Forms
Form INC – 1
Form INC-1 is filed for the reservation of the name of the proposed company. But before quoting the name in the form, it is recommended that applicants access the free name search facility of existing companies available on the MCA portal. The system will provide a list of closely resembling names of the existing companies based on the search criteria. This will help you avoid choosing a name similar to that of an existing company. You can make up to 6 choices of names in the order of your preference in the form.
Form INC-12 is filed for the grant of the license to operate as a Section 8 company. Along with this form, applicants are required to attach a draft copy of the Memorandum of Association (MOA) and Articles of Association (AOA). There is a prescribed format for Memorandum of Association of a Section 8 company in Form INC 13. The subscription pages of the MOA and AOA shall be signed by each subscriber along with their name, address, description, and occupation, in the presence of at least one witness.
Form INC 12 is to be submitted along with the following attachments :
a. INC-13 - Memorandum of Association
b. Draft Articles of Association
c. INC-15 for the declaration by each subscriber to MOA that the draft memorandum and articles of association have been drawn up in conformity with the provisions of Section 8
d. Estimated statement of Income & Expenditure for the next three years
e. List of proposed Promoters and Directors of the Company
The following forms are required to be filed after the issuance of the license to the company:
Form INC 7
INC 7 is the application for the incorporation of the company. The following documents must be attached along with Form INC 7:
a. Memorandum and articles of the company duly signed by all the subscribers
b. An affidavit from each of the subscribers and first directors in Form INC 9, that they are not guilty of any offense or misfeasance
c. Declaration in Form INC 8 that all the requirements of the Companies Act have complied with
d. Address of correspondence till the registered office is official
e. Address and Identity proofs of all the subscribers to MOA and first directors of the company
Form INC 22
Form INC 22 is filed for providing notice of the address of the company’s registered office. It can be filed along with Form INC-7, or within 30 days of the incorporation of the company.
Form DIR 12
Form DIR 12 is filed for the appointment of the directors of the company. It must be filed within 30 days from the date of the appointment of the directors.
Procedure for incorporation of a Section 8 company
Step 1 - Obtain a DSC of the proposed Directors of the Section 8 Company. Once a DSC is received, file Form DIR-3 with the ROC for getting a DIN.
Documents to attach for DIN application:
Proof of Identity and Address Proof.
Step 2 - Once the DIR-3 is approved, the ROC will allot a DIN to the proposed directors.
Step 3 - File Form INC-1 with the ROC for applying for a company name. A total of 6 names can be applied for in order of preference, out of which one would be allotted, based on availability.
Step 4 - After approval, file Form INC-12 with the ROC to apply for a licence for the Section 8 company.
Documents to attach with INC-12:
a. Draft MOA as per Form INC-13
b. Draft AOA
c. Declaration as per Form INC-14 (Declaration from Practicing Chartered Accountant)
d. Declaration as per Form INC-15 (Declaration from each person making application )
e. Estimated Income & Expenditure for next 3 years.
The subscription pages of the Memorandum and Articles of Association of the company shall be signed by every subscriber along with mentioning his name, address, and occupation, in the presence of at least one witness who shall attest the signature and sign and add his name, address, and occupation.
Step 5 - Once the Form is approved, a license under section 8 will be issued in Form INC-16.
Step 6 - After obtaining the license, file SPICE Form 32 with the ROC for incorporation along with the following attachments:
a. An affidavit from all the directors' cum subscribers - INC-9
b. Declaration of deposits
c. KYC of all the Directors
d. Form DIR-2 with its attachments i.e PAN Card and address proof of the directors
e. Consent letter of all the directors
f. Interest in other entities of the directors
g. Utility bill as a proof of Office address
h. NOC in case the premises are leased/rented
i. Draft MOA and AOA
If the ROC is satisfied with the forms submitted, he issues a Certificate of Incorporation along with a unique Company Identification Number (CIN).