Microfinance Company Registration Under

Section 8 - Lawgical India  

Setting up a microfinance company is a great initiative to help poor people and small firms through financial aid. In case you want to run your business in the form of a non-profit company but also wish to promote financial inclusion, then the registration of a Section 8 microfinance company would be an appropriate option for you in India.

At Lawgical India, we provide our clients with full legal assistance regarding the registration of section 8 microfinance companies. We assist all the way from documentation to incorporation of your business in India in the most efficient manner.

If you plan to issue microloans, encourage women to be entrepreneurs, or develop rural areas, then going for Section 8 microfinance company registration will help you establish your credibility in society.

What is Section 8 Microfinance Company Registration?

Section 8 microfinance company registration implies the registration of a non-profit company under Section 8 of the Companies Act, 2013, for the purpose of encouraging financial inclusion and social benefits instead of gaining any profit from their operations.

As opposed to NBFC microfinance institutions, which need to register with the RBI in order to perform their commercial lending activities, Section 8 companies concentrate their efforts on performing charitable work. They might provide financial assistance under the existing law but use the money generated for the purposes of the company’s activities.Lawgical India helps clients understand whether Section 8 microfinance company registration is the right choice for their organisation.

Why Go For Section 8 Microfinance Company Registration?

Some of the reasons for the preference of section 8 microfinance company registration are as follows:

1. Non-Profit Nature

The main aim of the venture is social development rather than profit distribution.

2. Legal Status

The registered company gets more credibility among donors, the government, banks, and beneficiaries.

3. Increased Credibility

A completed section 8 microfinance company registration reflects responsibility on the part of the venture.

4. Tax Advantages

Approval is subject to the tax laws; organisations become eligible for tax benefits.

5. Pan-India Activity

Following Section 8, microfinance company registration, the organisation can work all over India under certain laws.

Lawgical India takes care of every legal concern from the very start.

Aims of Section 8 Microfinance Company

The main aim of registering a section 8 microfinance company is to ensure that financially excluded people get better access to funds.

Some of the aims are the following:

Financial Inclusion

To provide financial support to economically weaker sections.

Empowering Women

To empower women by supporting them via self-help groups and microbusiness loans.

Rural Development

To promote entrepreneurship in rural and semi-rural areas.

Skills Development

To impart financial literacy and training programmes.

Community Welfare

To promote livelihood and social development projects.

Lawgical India provides professional advice in organising objectives for Section 8 microfinance company registration.

Section 8 Microfinance Company Registration - Eligibility Criteria

An individual must fulfil some of the legal conditions prior to registering for Section 8 microfinance company registration.

Directors

Two or more directors are essential for a private limited Section 8 company.

Members

Two or more members are essential.

Registered Office Address

A legitimate registered office address in India is necessary.

Purpose

The purpose of the company should be in the nature of a charitable, educational, financial inclusion, or any other social cause.

Our team of lawyers at Lawgical India checks the eligibility criteria before proceeding further with section 8 microfinance company registration.

Documents Needed

The following documents are usually needed in the case of Section 8 microfinance company registration:

Identification Proof

• PAN Card

• Aadhaar Card

• Passport (if any)

Address Proof

• Electricity Bill

• Bank Statement

• Driving Licence

• Passport

Office Documents

• Utility Bill

• Rent Agreement (in case of rented premises)

• NOC

Other documents

• Passport-size photos

• E-mail ID

• Mobile Number

• Digital Signature Certificate (DSC)

The preparation of authentic documents is one of the essential processes involved in the registration process of section 8 microfinance companies. At Lawgical India, all your documents will be thoroughly verified before submission of the application.

Procedure to Register Microfinance Section 8 Company

There are certain legal steps involved in registering the Section 8 microfinance company.

Step 1: Obtain DSC

It is required for all proposed directors.

Step 2: Director Identification Number (DIN)

DIN is acquired for every director through the process of incorporation.

Step 3: Name Approval

A distinct company name is approved by the Ministry of Corporate Affairs.

Step 4: Draft Legal Documents

Preparation of MOA and AOA as per objectives of the company is done.

Lawgical India makes sure that all the steps involved in registering the Section 8 microfinance company are carried out flawlessly.

Step 5: Filing of Incorporation Application

Having all the necessary documents ready, the incorporation application for registration of a Section 8 microfinance company is submitted to the Ministry of Corporate Affairs (MCA). In addition to objectives, it includes the registered office address and directors' information, along with the required documents.

Step 6: Issue of Certificate of Incorporation

Upon approval by MCA, the certificate of incorporation is issued. Post obtaining the certificate, the Section 8 microfinance company registration process becomes complete, and the entity begins functioning in compliance with the laws.

Legal experts at Lawgical India oversee the entire process of application.

Advantages of Section 8 Microfinance Company Registration

There are various benefits of opting for the process of section 8 microfinance company registration.

Increased Public Confidence

Once you register your Section 8 microfinance company, there will be an increase in public confidence among the donor agencies, financial institutions, government departments, and beneficiaries.

Distinct Legal Entity

As soon as the organisation gets the status of Section 8 company registration, it will have a distinct legal identity where it will be able to hold assets, make contracts, and do other activities independent of its members.

Limited Liability

The members will enjoy the benefit of limited liability.

Increased Funding Options

There are many funding agencies that would like to collaborate with the legal organisations. Lawgical India helps its clients register their Section 8 microfinance company properly so that they may become eligible for collaboration with many funding agencies.

Post-Registration Compliance  

Registration of Section 8 microfinance companies under Section 8 is just the first step towards becoming legally compliant.

Submission of ROC Returns Annually

The company must file annual returns and financial statements before the Registrar of Companies.

Maintenance of Proper Financial Accounts

It is very important to keep proper accounting books and accounts related to financial transactions.

Board Meetings

Conduct board meetings of the company regularly as per the requirements of the Companies Act, 2013.

Usage of Income

The income generated from the business must be utilised only for the purpose of carrying out charitable business and should not be paid out as dividends.

Lawgical India takes care of all the post-registration compliance needs of the organisations.

Mistakes to Avoid

A large number of individuals delay their process of registering a Section 8 microfinance company because of some of the avoidable mistakes they make.

These mistakes are:

• Picking an inappropriate name for the company.

• Incompleteness of documents.

• Incorrect charitable purposes.

• Failure to comply after registration.

Wrong incorporation details.

Consulting an expert avoids such mistakes and makes the whole process hassle-free.

Why Opt for Lawgical India?

In the process of registering Section 8 microfinance companies, it is necessary to select the right legal firm to save time and trouble.

Lawgical India provides:

• Professional legal experts

• Complete registration process

• Competitive pricing

• Accurate document preparation

• Timely filing of applications

• Customer assistance

• Compliance services

• Consultations

No matter whether you are starting up a social venture or planning to expand your existing venture, we have the right legal solution for you.

Frequently Asked Questions (FAQs)

1. What is the need for section 8 microfinance company registration?

Registration enables organisations to engage in the promotion of financial inclusion and social welfare through a recognised non-profit entity.

2. Does a Section 8 company earn profits?

No. All profits earned must be utilised solely for meeting the objectives of the company.

3. Is approval from RBI required?

Approval is needed based on the kind of activities to be carried out. Seek a professional legal opinion in this regard.

4. How long does the registration process take?

The duration usually varies depending on the availability of documents and the Ministry of Corporate Affairs' approval.

5. Why go for Lawgical India?

Professional legal consultancy, proper documentation, transparent procedures, and comprehensive assistance from registration to after registration are offered by Lawgical India.

Conclusion

In case you are aiming at establishing a non-profit organisation that would promote financial inclusion, then opting for the registration of a Section 8 microfinance company will prove to be a wise decision. In this way, you will not only get legitimacy but also a sound legal structure along with the chance of making a difference socially and, most importantly, complying with the Companies Act, 2013.

Thanks to the professional assistance of Lawgical India, the whole process of registration becomes easy and effective for you.