Register a Section 8 Company in India from Switzerland

How to Register a Section 8 Company in India from Switzerland

Switzerland has a long tradition of philanthropy, international development, and corporate social responsibility. Swiss foundations, NGOs, and corporate CSR arms seeking to establish a charitable presence in India can do so through a Section 8 Company—a non-profit entity registered under Section 8 of the Companies Act, 2013.

A Section 8 Company is formed for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any similar charitable objective. Unlike regular companies, it cannot distribute profits to its members—all surplus must be applied toward promoting its objects. The structure provides legal personality, limited liability, and the credibility needed to partner with Indian government agencies and receive tax-exempt donations.

Swiss investors benefit from a streamlined process: Switzerland is not a land-border country, so FDI proceeds through the automatic route without prior government approval. However, the Section 8 Company must still obtain a license from the Central Government and comply with the Foreign Contribution (Regulation) Act, 2010 (FCRA) to receive foreign contributions.

The entity requires a minimum of two members and two directors, with at least one director being an Indian resident who has stayed in India for at least 182 days in the financial year. Foreign nationals, including Swiss citizens, can serve as directors after obtaining a Director Identification Number (DIN).

FDI Route & Regulatory Requirements

The regulatory framework for a Swiss-backed Section 8 Company sits at the intersection of FDI policy, FEMA, the Companies Act, and FCRA.

Automatic Route for Swiss Investors

Since Switzerland does not share a land border with India, Swiss investments are not subject to Press Note 3 restrictions. FDI from Switzerland proceeds through the automatic route, meaning no prior government or RBI approval is required. This eliminates the 4–8 week approval delay that investors from land-border countries face.

FEMA & NDI Rules

Under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, foreign investment in Indian companies—including Section 8 Companies—must be made through issuance of equity instruments. This means a Section 8 Company receiving Swiss investment must be formed as a company limited by shares (not limited by guarantee). This is a critical structural requirement under FEMA, as the NDI Rules only recognize equity instruments as a valid form of FDI.

FCRA Requirements

The Foreign Contribution (Regulation) Act, 2010 classifies any receipt of funds from persons resident outside India by a non-profit entity as a foreign contribution. A Section 8 Company receiving funds from its Swiss promoters, Swiss donors, or any foreign source must either:

• Obtain FCRA registration from the Ministry of Home Affairs (available after 3 years of operation with minimum INR 15 lakh spent on charitable activities), or
• Obtain FCRA prior permission for a specific project or contribution (available from Year 1)

Under the 2020 FCRA Amendment, all foreign contributions must be received in a designated account at the State Bank of India, New Delhi Main Branch before being transferred to utilization accounts. The 2025 Amendment Rules mandate real-time disclosure of all foreign contributions within 7 days of receipt.

DTAA Benefits for Swiss Investors

India and Switzerland have had a DTAA in force since 1995, though the MFN clause was suspended by Switzerland effective January 1, 2025.

Applicability to Section 8 Companies

Since Section 8 Companies cannot distribute dividends, the DTAA's dividend provisions are not directly relevant. However, the treaty rates apply to other cross-border payments:

• Interest: Withholding tax capped at 10% (relevant for any interest-bearing instruments)
• Royalties: Withholding tax capped at 10%
• Fees for Technical Services: Withholding tax capped at 10%

Tax Exemptions Under Indian Domestic Law

More significant for non-profits are the domestic tax benefits available under Indian law:

• Section 12A registration: Exemption from income tax on surplus applied to charitable purposes
• Section 80G registration: Donors (including Indian corporate CSR donors) receive a tax deduction for contributions to the Section 8 Company
• GST exemptions: Certain charitable activities, including healthcare, education, and social welfare, are exempt from GST
• FCRA-related exemptions: Foreign contributions received for charitable purposes are generally exempt from income tax if the entity has 12A registration

These registrations must be renewed every 5 years under the 2020 amendments to the Income Tax Act.

Document Requirements & Authentication

Switzerland is a member of the Hague Apostille Convention, so Swiss documents require an apostille from the cantonal chancellery rather than embassy attestation.

Documents Required from Switzerland

• Board Resolution / Foundation Council Decision: Approving the establishment of the Section 8 Company in India, apostilled
• Extract from the Commercial Register (Handelsregisterauszug): Of the Swiss entity, apostilled (or equivalent registration document for foundations)
• Articles of Association (Statuten) / Foundation Deed (Stiftungsurkunde): Of the Swiss organization, apostilled
• Passport copies: Of all proposed directors, notarized and apostilled
• Address proof: Of all proposed directors (utility bill or bank statement, not older than 2 months), apostilled
• Photographs: Passport-size photographs of all directors
• Statement of objects: Detailed description of the charitable objectives and proposed activities in India
• Power of Attorney: If an authorized representative handles incorporation, apostilled

Documents Required in India

• Digital Signature Certificate (DSC) for all directors
• Director Identification Number (DIN) application
• Registered office address proof (rental agreement + NOC from landlord + utility bill)
• INC-9 declaration by each subscriber and first director
• INC-12 application for Section 8 license
• INC-13 declaration that income will be applied solely to the company's objects

Apostille Process in Switzerland

The competent authority varies by canton. For documents issued by cantonal authorities, the relevant cantonal chancellery (Staatskanzlei) issues apostilles. For federal documents, the Federal Chancellery (Bundeskanzlei) in Bern is the competent authority. Processing takes 1–3 working days at a fee of CHF 20–50 per document. Documents must first be notarized by a Swiss notary (Notar/Notaire).

Step-by-Step Registration Process

Without PN3 requirements, the Swiss registration process for a Section 8 Company is more direct, though the Section 8 license and FCRA steps add time.

Step 1: Define Objects & Draft MoA/AoA

Clearly articulate the charitable objects. The Memorandum of Association must state that profits will be applied solely for promoting these objects. The Articles must prohibit dividend distribution. For Swiss foundations establishing Indian operations, the objects should align with the Swiss entity's mandate.

Step 2: Obtain Digital Signature Certificates (DSC)

All proposed directors must obtain a DSC from a certified authority. Foreign directors apply using their passport. Timeline: 3–5 working days.

Step 3: Apply for Section 8 License (INC-12)

File Form INC-12 with the Registrar of Companies along with the draft MoA and AoA, Form INC-13 declaration, financial projections for 3 years, and a statement of proposed activities. The RoC publishes a notice in a newspaper inviting objections (21 days). Timeline: 15–25 working days after the notice period.

Step 4: Reserve Company Name (SPICe+ Part A)

Once the Section 8 license is granted, reserve the company name through SPICe+ Part A. The name must include terms like “Foundation,” “Forum,” “Association,” “Council,” or similar—not “Limited” or “Pvt Ltd.”

Step 5: File SPICe+ Part B for Incorporation

Complete Part B with company details, director information, registered office address, and attach the Section 8 license, e-MoA (INC-33), and e-AoA (INC-34). This integrated form also applies for PAN, TAN, EPFO, and ESIC.

Step 6: Obtain Certificate of Incorporation

The RoC issues the Certificate of Incorporation along with CIN, PAN, and TAN. Timeline: 5–7 working days.

Step 7: Open Bank Account & Designated FCRA Account

Open a current account with an AD bank. For receiving foreign contributions, open a designated FCRA account at the State Bank of India, New Delhi Main Branch (mandatory under the 2020 FCRA Amendment). All foreign contributions must first be received in this designated account before transfer to the utilization account.

Step 8: Remit Capital & File FC-GPR

The Swiss promoter remits capital in foreign currency. The AD bank issues a Foreign Inward Remittance Certificate (FIRC). File Form FC-GPR with the RBI through the FIRMS/SMF portal within 30 days of share allotment.

Step 9: Apply for FCRA Registration or Prior Permission

Apply for FCRA prior permission (available immediately) or FCRA registration (after 3 years of operation with minimum INR 15 lakh in charitable spending) from the Ministry of Home Affairs through the FCRA online portal.

Step 10: Apply for 12A and 80G Registration

Apply to the Income Tax Department for Section 12A (income tax exemption) and Section 80G (donor tax deduction) registrations. Both are granted provisionally for 5 years initially.

Timeline & Costs

The Swiss pathway avoids the PN3 approval step but requires the Section 8 license and FCRA compliance, both of which add time.

Realistic Timeline Breakdown

Fee Breakdown

• Government fees (MCA): INR 2,000–5,000 (Section 8 companies have lower fee thresholds)
• DSC: INR 1,500–3,000 per director
• Newspaper publication: INR 5,000–15,000
• Stamp duty: Varies by state; generally lower for non-profits
• FCRA application fee: INR 5,000 (registration) or INR 3,000 (prior permission)
• Professional fees: INR 30,000–80,000 (CA/CS handling filing)
• Apostille fees (Switzerland): CHF 20–50 per document
• 12A/80G application: No government fee; professional fees included above

Post-Registration Compliance

Section 8 Companies have specific compliance obligations beyond standard corporate filings.

Annual Filings

• Annual Return (MGT-7A): Filed within 60 days of the AGM
• Financial Statements (AOC-4): Filed within 30 days of the AGM
• Income Tax Return: Filed by October 31 each year
• FCRA Annual Return (Form FC-4): Filed by December 31 with details of all foreign contributions received and utilized
• FLA Return: Annual Foreign Liabilities and Assets return to RBI by July 15

Section 8 Specific Requirements

• All surplus must be applied to the objects—no dividends permitted
• License is perpetual but revocable if objects are violated or if the company fails to comply with conditions
• Maintain separate books for FCRA-funded activities
• Annual compliance with 12A and 80G renewal (every 5 years)
• Minimum 4 board meetings per year

FCRA Compliance

• Designated SBI FCRA account for all foreign contributions
• Minimum 85% utilization of foreign contributions received during the year
• Administrative expenses capped at 20% of total foreign contributions
• Real-time disclosure on the FCRA portal within 7 days of receipt
• No sub-granting of foreign contributions to other organizations without prior MHA approval

Common Challenges for Swiss Non-Profits

1. Company Limited by Shares Requirement

Swiss foundations (Stiftungen) are typically not share-based entities. However, the Indian Section 8 Company must be limited by shares to receive foreign investment under FEMA. This structural requirement often surprises Swiss non-profit organizers and must be addressed at the planning stage. The Swiss entity becomes a shareholder, not a donor, in the initial capitalization.

2. FCRA Account Centralization

The mandatory requirement to receive all foreign contributions through the SBI New Delhi Main Branch creates logistical challenges, especially for organizations operating in other Indian cities. The Section 8 Company can maintain a utilization account at any bank but must route all foreign receipts through the SBI account first.

3. FCRA vs. FEMA Distinction

There is an important distinction between FDI (governed by FEMA) and foreign contributions (governed by FCRA). Capital invested in shares of the Section 8 Company is treated as FDI under FEMA and requires FC-GPR filing. Subsequent grants, donations, or project funding from the Swiss entity are classified as foreign contributions under FCRA and require FCRA registration or prior permission. Many organizations conflate these two regimes, leading to compliance issues.

4. Aligning Swiss and Indian Reporting Standards

Swiss non-profits are accustomed to Swiss GAAP FER (for smaller entities) or IFRS reporting. Indian Section 8 Companies must follow Indian Accounting Standards (Ind AS) or Indian GAAP. Reconciling reporting requirements for both Swiss regulatory bodies (such as the Swiss Federal Supervisory Authority for Foundations, or ESA) and Indian authorities requires careful planning.

5. MFN Suspension on Operational Payments

While the January 2025 MFN suspension primarily affects dividends (not applicable to Section 8 Companies), it signals a broader shift in the India-Switzerland tax treaty landscape. Swiss non-profits making technical service payments or receiving interest from Indian operations should monitor treaty developments closely.

Frequently Asked Questions

Does a Swiss non-profit need government approval to register a Section 8 Company in India?

No. Switzerland is not subject to Press Note 3, so Swiss entities can establish a Section 8 Company in India through the automatic route without prior government approval. However, the Section 8 license from the Central Government (via RoC) and FCRA registration from the Ministry of Home Affairs are still required.

Can a Swiss foundation establish a Section 8 Company limited by guarantee?

Not if it involves foreign investment. Under FEMA and the NDI Rules, FDI must be made through equity instruments, which requires a company limited by shares. Swiss foundations must therefore establish a Section 8 Company limited by shares, where the foundation becomes a shareholder.

What is the difference between FCRA registration and FCRA prior permission?

FCRA registration is available after the Section 8 Company has been in operation for at least 3 years and has spent minimum INR 15 lakh on charitable activities. FCRA prior permission is project-specific and available from Year 1, but must be renewed for each new project or contribution. Most Swiss-backed Section 8 Companies start with prior permission and transition to full registration after 3 years.

Are donations from Swiss donors to the Indian Section 8 Company tax-deductible in Switzerland?

Tax deductibility in Switzerland depends on Swiss tax law and the canton of the donor's residence. Generally, donations to foreign non-profits are not directly tax-deductible in Switzerland. Many Swiss donors contribute through a Swiss intermediary foundation that is recognized for tax purposes and then channels funds to the Indian entity.

What tax exemptions can the Section 8 Company obtain in India?

The company can apply for Section 12A registration (income tax exemption on surplus) and Section 80G registration (donors receive tax deduction). Both are initially granted provisionally for 5 years. Certain charitable activities are also exempt from GST.

How long does FCRA prior permission take?

FCRA prior permission from the Ministry of Home Affairs typically takes 4–6 weeks. The application requires detailed information about the proposed activities, source of funds, and the foreign contributor. The permission is valid for a specific project and amount.

Do I need a resident director for a Section 8 Company?

Yes. Under Section 149(3) of the Companies Act, 2013, every company must have at least one director who has stayed in India for at least 182 days in the financial year. Beacon Filing offers resident director services for foreign-backed non-profits that do not have a local director.