Section 8 Company
Section 8 Company
A Section 8 Company is a type of non-profit organization in India regulated under the Companies Act, 2013. It is formed with the objective of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection. Unlike other companies, Section 8 Companies do not distribute profits to their members but reinvest them in furthering their objectives. They enjoy certain benefits such as tax exemptions and simpler compliance requirements. To register, founders must obtain name approval, file incorporation documents, and secure a license from the Registrar of Companies. This structure is ideal for organizations dedicated to social and charitable causes.
Documents Required
- PAN Card
- Aadhaar Card
- Passport (Foreign Nationals Only)
Overview of Section 8 Company Registration
A Section 8 Company is a type of corporation established to promote non-profit activities, such as education, social welfare, environment preservation, arts, sports, charity, and more. This follows the provisions of the Companies Act 2013.
The essential purpose of registering a Section 8 Company is to encourage non-profitable goals, including but not limited to trade, arts, commerce, education, charity, environmental protection, sports research, and social welfare. To register a Section 8 Company, a minimum of two directors are required, and there is no requirement for a minimum paid-up capital to set up such a company.
Key Points about Section 8 Company Act
Non-Profit Objective: Formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection.
No Profit Distribution: Profits or income cannot be distributed among members; they must be reinvested to further the company’s objectives.
Incorporation Requirements: Must obtain a license from the Registrar of Companies (RoC) and comply with specific incorporation procedures, including the submission of the Memorandum of Association (MoA) and Articles of Association (AoA).
Limited Liability: Members have limited liability, protecting their personal assets from the company’s debts and liabilities.
Tax Benefits: Eligible for various tax exemptions and benefits under Indian tax laws, provided they meet certain conditions.
Compliance: Subject to less stringent compliance requirements compared to other types of companies, making it easier to manage. Name: Must include words like “Foundation,” “Society,” “Association,” “Federation,” “Charities,” “Council,” “Club,” or similar in its name.
Directors: Requires a minimum of two directors, with no upper limit on the number of directors.
License Revocation: The RoC can revoke the license if the company contravenes its objectives or fails to comply with the Act.
No Profit Distribution: Profits or income cannot be distributed among members; they must be reinvested to further the company’s objectives.
Incorporation Requirements: Must obtain a license from the Registrar of Companies (RoC) and comply with specific incorporation procedures, including the submission of the Memorandum of Association (MoA) and Articles of Association (AoA).
Limited Liability: Members have limited liability, protecting their personal assets from the company’s debts and liabilities.
Tax Benefits: Eligible for various tax exemptions and benefits under Indian tax laws, provided they meet certain conditions.
Compliance: Subject to less stringent compliance requirements compared to other types of companies, making it easier to manage. Name: Must include words like “Foundation,” “Society,” “Association,” “Federation,” “Charities,” “Council,” “Club,” or similar in its name.
Directors: Requires a minimum of two directors, with no upper limit on the number of directors.
License Revocation: The RoC can revoke the license if the company contravenes its objectives or fails to comply with the Act.
Expert Consultant for Section 8 Company
Tax Exemptions: Section 8 Companies can avail various tax exemptions and benefits under Indian tax laws, reducing the financial burden on the organization.
Limited Liability: Members' liability is limited to their share in the company, protecting personal assets from business liabilities.
Credibility and Recognition: Being registered under the Companies Act, 2013, a Section 8 Company enjoys higher credibility and recognition compared to other non-profit structures.
Separate Legal Entity: The company is a separate legal entity, allowing it to own property, enter into contracts, and sue or be sued in its own name.
No Minimum Capital Requirement: There is no minimum capital requirement for forming a Section 8 Company, making it accessible for various non-profit initiatives.
Limited Liability: Members' liability is limited to their share in the company, protecting personal assets from business liabilities.
Credibility and Recognition: Being registered under the Companies Act, 2013, a Section 8 Company enjoys higher credibility and recognition compared to other non-profit structures.
Separate Legal Entity: The company is a separate legal entity, allowing it to own property, enter into contracts, and sue or be sued in its own name.
No Minimum Capital Requirement: There is no minimum capital requirement for forming a Section 8 Company, making it accessible for various non-profit initiatives.
Limited Fundraising Options: Section 8 Companies cannot raise capital by issuing shares, limiting their fundraising options compared to other business structures.
Strict Regulations: They are subject to stringent regulations and compliance requirements, which can be time-consuming and costly to maintain.
Prohibition on Profit Distribution: Profits or income cannot be distributed to members, which might deter potential investors.
Lengthy Approval Process: The process of obtaining the necessary licenses and approvals from the Registrar of Companies (RoC) can be lengthy and complex.
Restricted Purpose: Activities are strictly limited to the objectives stated in the Memorandum of Association, restricting operational flexibility.
Strict Regulations: They are subject to stringent regulations and compliance requirements, which can be time-consuming and costly to maintain.
Prohibition on Profit Distribution: Profits or income cannot be distributed to members, which might deter potential investors.
Lengthy Approval Process: The process of obtaining the necessary licenses and approvals from the Registrar of Companies (RoC) can be lengthy and complex.
Restricted Purpose: Activities are strictly limited to the objectives stated in the Memorandum of Association, restricting operational flexibility.