A Step-by-Step Process of Section 8 Company Registration Online with Lawgical India

 Establishing a non-profit organization in India is a significant initiative and has the potential to transform society. If your goal is to establish a company that serves a social purpose, like helping the underserved communities with microfinance, then section 8 company registration online is a good option. Lawgical India is here to guide you and simplify the entire process of section 8 microfinance company registration for you. Be it your first time or you have prior experience, this guide will equip you with all necessary details regarding section 8 microfinance company registration in India along with its importance, and the assistance Lawgical India provides

What is a Section 8 Company? 

A Section 8 company is categorized as an organization formed under the Companies Act, 2013 for registration of NGOs which aims includes educational, health-related, environmental as well as socially inclusive development services. Unlike other businesses, these companies are not driven towards making profit for shareholders. Any revenue generated is diverted back into sustaining their social objectives.

As far as section 8 microfinance company registration is concerned, these organizations focus on offering financial services, such as loans, saving, and insurance, to those who do not have easy access to banks. It helps empower economically disadvantaged individuals, small businesses, and vulnerable communities by providing the financial resources necessary for them to flourish. 

When it comes to Section 8 Company Registration Online or starting a microfinance business, we at Lawgical India are here to assist you. This is beneficial in many ways; allow us to explain how to get started and why this is such a good choice. 

What are the Benefits of Choosing a Section 8 Microfinance Company? 

Microfinance contributes significantly to financial inclusion in the country. It also benefits small-scale industries, rural marketers, and low-income families by providing them credit access without long bank queues or collateral. The section 8 microfinance company registration in India has gained popularity for the following reasons: 

• No RBI Approval Needed: Section 8 microfinance companies are not like other financial institutions. They do not have to get a license from the Reserve Bank of India (RBI) to operate provided they follow the RBI guidelines. This accelerates and simplifies the setup process.

• No Minimum Capital Requirement: Unlike Non-Banking Financial Companies (NBFCs) which have a minimum capital requirement of ₹5 crores, you can start without any significant money.

• Tax Benefits: Donors to your organization will be able to deduct taxes, so section 8 companies may qualify for exemption under sections 12A and 80G of the income tax act of 1961. Thus, enhancing your funding opportunities.

• Credibility: Having registered as a Section 8 company enhances the professional and credible image of the organization which is useful for partnerships with banks, corporates, or international donors.

• Flexibility: Helps make a difference for under banked populations is the ability to provide unsecured loans up to ₹50,000 for small businesses and up to ₹1.25 lakh for housing purposes.

With Lawgical India, we strive to help you focus on your mission with our straightforward section 8 company registration online process.

The Step-by-Step Process for Section 8 Company Registration Online 

The steps for registering a microfinance company under section 8 may seem complicated, but they are quite simple when simplified. Here is an overview of the steps to register your Section 8 microfinance company with Lawgical India’s professionals: 

Step 1: Obtain Digital Signature Certificates (DSCs) 

As with all section 8 company registrations, the first step involves obtaining Digital Signature Certificates (DSCs) for the directors. These serve as digital signatures for signing e-forms. With Lawgical India, you will receive DSCs from authorized bodies in no time. 

Step 2: Procure Director Identification Numbers (DINs) 

Each director of the Section 8 company must procure a Director Identification Number (“DIN”) , which is issued by the Ministry of Corporate Affairs (“MCA”). This is a one-time issue for each director, so it is relatively painless. With your permission, we will apply for the DINs while finalizing your other documents.

Step 3: Shenanigans Naming

For your business, consider names that promise the other will be non-profit. In the case of Section 8 micro finance company registration in India, you may use such words as “Foundation,” “Association,” “Sanstha” or “Microcredit” to signify that it is a Section 8 company. For example, the name “Lawgical India Microfinance Foundation” would be suitable. You will have to submit a name application through the MCA RUN (Reserve Unique Name) service, and Lawgical India will guide you through name approval effortlessly.

Step 4: Prepare the Memorandum and Articles of Association

The Memorandum of Association and Articles of Association constitute the most basic documents of your company which contains the objectives and the principles of operation of the company. In case of registration of a section 8 microfinance company, the MOA must state that the company will provide services to low income groups and shall not operate for profit. The concerned team of Lawgical India will prepare these documents in compliance with the law.

Step 5: Apply Form INC-12 for the License

In order to be considered a Section 8 company, a license issued by the Registrar of Companies is necessary. This can be obtained by submitting Form INC-12 together with MOA, AOA and other documents such as:

• A statement signed by the directors affirming that they have adhered to the provisions of Section 8.

• Revenue forecast for the next 3 years. 

• Address and identification documentation for each director and shareholder. 

• Your company’s social objectives statement. 

Lawgical India will manage the filing procedures to ensure all documents are complete. 

Step 6: Filing SPICe+ Form 

After approval of the name and license, you are required to file SPICe+ (Simplified Proforma for Incorporating Company Electronically Plus) with the MCA. This form contains your company’s incorporation details along with its PAN, TAN and other registration numbers. This will be taken care of by the team at Lawgical India. 

Step 7: Receive Your Certificate of Incorporation 

Upon review and granting of your application by the ROC, you will receive a Certificate of Incorporation alongside a Company Identification Number (CIN). This formally certifies that you have registered a Section 8 microfinance company. Moreover, you will automatically receive a PAN and TAN through the SPICe+ process.

Step 8: Open a Bank Account

Now that you have your Certificate of Incorporation, PAN, and TAN, you are eligible to open a bank account for your company. If you are looking to register a section 8 microfinance company in India, you will need to follow some compliance requirements set forth by the RBI, like providing credit cards for eligible borrowers with clear terms on how interest is charged. Lawgical India offers guidance with these compliance issues. 

Step 9: Apply for Tax Exemptions  

In order to maximize the impact of your company, apply for tax exemptions under 12A and 80G. These provisions enable your company to be tax exempted from income tax and also allows the donors to claim deduction over their contribution. Moreover, certain microfinance services could be exempt from GST depending on turnover. Lawgical India will assist you in utilizing these tax benefits. 

Step 10: Start Operations!  

With the company registration done and bank account opened, you are now ready to offer microfinance services. Your Section 8 microfinance company can help rural entrepreneurs through small loans and assist low income households with savings accounts.

Why Collaborate with Lawgical India? 

Here at Lawgical India, we understand that section 8 company registration online might be complicated for newcomers. That is precisely where we can help by making it easier. Here is why we are best positioned to assist with section 8 microfinance company registration: 

• Expert Guidance: Our specialists are well-versed with the Companies Act, 2013 as well as the regulations set forth by the RBI. We take care of the filing and compliance, so you do not have to stress. 

• Fast and Affordable: We value time and offer quick, no-nonsense services at fair rates which allows you to keep your attention on your mission without burning a hole in your pocket. 

• End-to-End Support: From obtaining DSCs to applying for tax exemption, we offer comprehensive support.  

• Tailored Solutions: Be it a microfinance company or any other non-profit venture, we align our services with the distinct objectives of each client. 

With Lawgical India, section 8 microfinance company registration in India becomes the gateway, not merely a procedure. It marks the beginning of your journey towards fostering community empowerment and initiating transformative social change.

Understanding RBI Rules for Registration of Section 8 Microfinance Companies 

The Reserve Bank of India has put in place measures to safeguard section 8 microfinance company registration in India operates in a balanced way and safeguards the interests of the people who will be borrowing. Below are some regulations that are essential for you to understand. 

• Limit on Loans: You are permitted to provide unsecured loans amounting to ₹2.4 lakh to households earning ₹3 lakh annually. Here the term ‘household’ refers to a family unit (husband, wife, and unmarried children). 

• Caps on Repayments: Loan repayments on a monthly basis should not exceed 50% of a household’s income on a monthly basis. So for example, a household earning ₹3 lakh a year (which is ₹3,000 a month) can take a loan where repaid is set at ₹12,500. 

• Interest Rates: You may charge 26% per annum on loans offered to borrowers which is greater than the traditional banks but within the control of fairness. 

• No Prepayment Penalties: Borrower defaults and pay back the loan without extra charges. 

• Transparency: You must provide all borrowers with loan interest and processing fees of maximum 1% of the loan amount. 

Section 8 microfinance companies can greatly assist underserved communities to build trust and credibility by following the guidelines consultation provided by Lawgical India for compliance with RBI and MCA regulations.

How Section 8 Microfinance Companies Benefit Society 

The social and legal context in starting a microfinance company is important. Understanding why they make a difference is equally important: 

• Financial Inclusion: Unlike traditional banking institutions that ignore small farmers, women entrepreneurs, and low-income households, micro-financing provides insurance, savings, and loans. 

• Empowering Communities: The financial services offered by micro finance institutions aid in averting financial evasions like Emergencies, self-funded housing, and owning SMEs. 

• Job Creation: Supplementing small enterprises generates more sustainable employment opportunities and economic development in underdeveloped and rural areas through microfinance. 

• Women Empowerment: financially enables them to support their families dealing with the high cost of living through receiving women focused microfinance loans. 

• Self-sufficiency: Section 8 microfinance companies are aiding people in becoming self-sufficient through credit while teaching them basic money management skills. 

Turn dreams into reality and create a positive ripple effect with Lawgical India by registering your Section 8 company online.

Obstacles and Solutions

Though applying for an Section 8 microfinance company is a great alternative, it certainly has its difficulties. This is how Lawgical India is ready to assist you:

• Overwhelming Documentation: Creating the MOA, AOA, and Form INC-12 is quite difficult. You will greatly benefit having us as your legal consultants since we will prepare and adjust every detail to ensure every document is mistake free.

• Laws and Regulations: You are obliged to submit annual returns to the ROC and MCA and follow the compliance guidelines of RBI. We will assist you with the tasks and timelines needed to stay compliant.

• Lengthy Procedure: It is takes around 60-75 days to register a Section 8 company, which is far longer than establishing a trust. At Lawgical India, we have refined systems in place which allow us to expedite the entire process for you.

• Financial Support: It is not easy to come by funds, even though Section 8 companies are eligible for grants and donations. We will guide you on attracting CSR funds, government grants, and donations from overseas.

With our guidance, you will overcome these challenges and significantly improve your microfinance company.

Taxation and Financial Perks

In India, one of the most appealing aspects of registering a microfinance company under Section 8 is the associated tax benefits. Let us summarize:

• Income Tax Exemptions: With regard to social enterprises, the governing tax body shall not collect any income tax from the company as per Section 12A, provided the income is utilized for social purposes.

• Donor Deductions: Section 80G allows tax benefits for the donors which eases the process of obtaining funds for the company.

• GST Exemptions: In the case where your turnover is less than ₹20 lakh, certain microfinance activities are exempted from the GST. If you exceed this threshold, Lawgical India offers assistance with GST registration and compliance.

• TDS Compliance: You’ll be required to adhere to Tax Deducted at Source (TDS) filings for payments to suppliers or staff. We guarantee adherence so you can stay compliant with these regulations.

With these tax benefits, non-profit organizations can make use of section 8 company registration online for their convenience and Lawgical India will assist you in utilizing all advantages.

How Long Does It Take?

The estimated time frame for section 8 microfinance company registration is 60-75 days, this is contingent on the pace at which the ROC processes your application. Here is an estimated schedule:

- DSC and DIN: 3-5 days

- Name Approval: 5-10 days

- Drafting MOA/AOA and Filing INC-12: 10-15 days

- SPICe+ Filing and Incorporation: 30-45 days

- Bank Account and Tax Registrations: 5-10 days

With Lawgical India, we ensure the timeline is minimized so you can start operating your microfinance business at the earliest. 

Documents Needed for Registration

To initiate section 8 company registration online, you will require the following documentation:

• PAN card, Aadhaar card, voter ID, or passport of all directors and shareholders.

• Recent passport size photographs of the directors and shareholders (must be within 10 months).

• Address verification (electricity bill, water bill, or bank statement) for directors and shareholders.

• Lease agreement or proof of ownership for the registered office.

• Financial projections for three years.

• Declaration of compliance confirming adherence to Section 8 regulations.

With Lawgical India, you will receive assistance in compiling and submitting your documents in the right manner.

Begin Your Journey with Lawgical India

For anyone eager to make a social impact by registering a section 8 microfinance company in India, Lawgical India is well equipped to assist you. Our passion lies in facilitating community-driven non-profits and microfinance institutions. With us, you can effortlessly complete your section 8 company registration online in a matter of minutes, at a low cost, and without any tension.

Are you ready? Reach out to Lawgical India now and let us help actualize your ideas. Be it aiding the growth of small businesses or extending loans to low-income families, we will ensure that the registration of your section 8 microfinance company is seamless. Together, we can build a better tomorrow.