Introduction:-
Section 8 microfinance companies play a crucial role in financial inclusion and empowerment by providing access to credit and financial services to the underprivileged sections of society. If you're considering registering a Section 8 microfinance company, you likely have many questions about the process. In this article, we will address some of the frequently asked questions (FAQs) related to Section 8 microfinance company registration.
Frequently Asked Questions:-
1. What is a Section 8 Microfinance Company?
A Section 8 microfinance company is a non-profit organization registered under Section 8 of the Companies Act, 2013. Its primary objective is to promote the welfare and financial inclusion of economically weaker sections of society through microfinance activities.
2. What are the Eligibility Criteria for Section 8 Microfinance Company Registration?
To be eligible for Section 8 microfinance company registration, the following conditions must be met:
- The company's sole objective must be to promote charitable or social welfare activities, including microfinance.
- Profits, if any, are used for promoting the company's objectives and not distributed among the members.
- The company should not have the intention of using its profits or any other income for personal gain.
3. How to Register a Section 8 Microfinance Company?
The registration process involves several steps:
- Name Reservation: Choose a unique and meaningful name for your company and apply for its reservation with the Registrar of Companies (RoC).
- Drafting Memorandum and Articles of Association: Prepare the Memorandum and Articles of Association in compliance with the provisions of Section 8 of the Companies Act.
- Application Submission: Submit the required documents, including the Memorandum and Articles of Association, to the RoC.
- RoC Approval: The RoC will review the application. If everything is in order, they will issue the Certificate of Incorporation.
4. Can a Section 8 Microfinance Company Distribute Dividends?
No, a Section 8 microfinance company cannot distribute dividends to its members. Any profits earned must be ploughed back into the company to further its charitable objectives.
5. What are the Tax Benefits of Section 8 Microfinance Companies?
Section 8 microfinance companies are eligible for tax exemptions under Section 12AA and Section 80G of the Income Tax Act, 1961. Donors to such companies can also avail tax benefits under Section 80G.
Conclusion:-
Registering a Section 8 microfinance company registration is a noble endeavor that can have a significant impact on the lives of the underprivileged. It's essential to understand the legal and procedural aspects to ensure compliance with all relevant regulations. If you have further questions or need assistance with the registration process, it's advisable to consult with legal experts or professional consultants.