A Section 8 Company in India is a special type of non-profit organization formed under Section 8 of the Companies Act, 2013. It is registered with the objective of promoting charitable causes such as education, art, science, sports, social welfare, religion, and environmental protection. Unlike regular companies, a Section 8 Company cannot distribute its profits to its members. Instead, all income must be reinvested in promoting the organization’s objectives.
Key Features of Section 8 Company
- Non-Profit Motive: The primary goal is to serve social, charitable, or philanthropic purposes, not to earn profit.
- Legal Status: It enjoys a separate legal identity like other companies, meaning it can own property and enter into contracts.
- No Dividend Distribution: Profits or income cannot be distributed among members; they must be used only for the company’s objectives.
- Limited Liability: Members have limited liability, similar to private limited companies.
- Exemptions & Benefits: Section 8 Companies receive various tax exemptions and benefits under the Income Tax Act.
How to Register a Section 8 Company in India
Step 1: Obtain Digital Signature Certificate (DSC)
For the proposed directors to sign documents electronically.
Step 2: Apply for Director Identification Number (DIN)
A unique number issued to all directors.
Step 3: Name Approval
Use the RUN (Reserve Unique Name) service on the MCA portal to propose and reserve a name.
Step 4: File Form INC-12
Submit the application for a license under Section 8 with required documents like MoA, AoA, declarations, and income & expenditure statement.
Step 5: Incorporation Forms (SPICe+)
Once the license is approved, file the incorporation forms along with the license to complete the registration.
Documents Required
- PAN & Aadhar of directors
- Address proof
- Passport size photographs
- Utility bill of registered office
- No objection certificate (NOC) from the property owner
- Memorandum and Articles of Association (MoA and AoA)
- Declaration from professionals (CA, CS, Advocate)
Advantages of Section 8 Company
- Credibility: Recognized and regulated under the Companies Act, adding credibility.
- Tax Benefits: Eligible for income tax exemptions under Sections 12AA and 80G.
- Separate Legal Entity: The company has its own legal existence.
- Perpetual Succession: The company continues even after the death of its members.
- No Minimum Capital Requirement: No minimum paid-up capital is required.
Differences Between Section 8 Company and Other NGOs
| Criteria | Section 8 Company | Trust | Society |
|---|---|---|---|
| Governing Law | Companies Act, 2013 | Indian Trusts Act, 1882 | Societies Registration Act, 1860 |
| Registration Authority | Registrar of Companies | Sub-Registrar | Registrar of Societies |
| Legal Structure | Company | Trust | Society |
| Annual Compliance | High | Low | Medium |
FAQs About Section 8 Company
Q1: Can a Section 8 Company make profits? Yes, but the profits must be used for charitable purposes and not distributed among members.
Q2: Is there a minimum capital requirement? No, Section 8 Companies do not have a minimum capital requirement.
Q3: Can foreigners be members of a Section 8 Company? Yes, with proper documentation and approval.
Q4: Is it mandatory to have a registered office? Yes, a valid address proof and NOC from the premises owner are required.
Conclusion
A Section 8 Company is ideal for individuals or groups looking to make a social impact while enjoying the legal and tax advantages of company structure. With proper registration, documentation, and compliance, it offers a strong foundation for operating charitable or not-for-profit initiatives in India.
