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What is a Section 8 Company? - Companies Act, 2013

A Section 8 company, as defined under the Companies Act 2013, is a non-profit organization established to promote fields like education, arts, commerce, science, research, sports, charity, social welfare, religion, and environmental protection. These entities reinvest their profits to fulfill their objectives and do not distribute dividends among shareholders.

Overview of Section 8 Company Registration

Section 8 Companies operate as legal non-profit entities, ensuring transparency and credibility. With no minimum capital requirement and a separate legal identity, these companies function with perpetual existence and increased trustworthiness. A minimum of two directors is required to register a Section 8 company, and the process follows the provisions of the Companies Act 2013.

Key Highlights of Section 8 Company Act

• NGOs in India can be registered as a Section 8 Company under the Companies Act, 2013.

• The company must use its profits for charitable objectives and not distribute dividends.

• Previously known as Section 25 Companies under the Companies Act, 1956.

• Section 8 Companies must comply with the Companies Act 2013, including tax, ROC filings, and GST regulations.

• Any amendments to the MOA and AOA require prior government approval.

Benefits of Registering a Section 8 Company

1. Tax Exemption

Section 8 companies registered under Section 12AA of the Income Tax Act are eligible for 100% tax exemption, making them financially efficient for charitable purposes.

2. No Minimum Capital Requirement

Unlike other business structures, Section 8 companies have no minimum capital requirement and can adjust their funding according to growth needs.

3. Separate Legal Identity

A Section 8 company enjoys a distinct legal identity, ensuring autonomy, credibility, and perpetual existence.

4. Enhanced Credibility

Due to their strict legal compliance requirements, Section 8 companies are more trustworthy compared to NGOs and trusts.

5. No Mandatory Name Restriction

Unlike other companies, Section 8 companies are not required to use terms like "Private Limited" or "Limited" in their names.

Eligibility Criteria for Section 8 Company Registration

• The company must be formed for charitable or non-profit purposes.

• A minimum of one director is required.

• At least one director must be a resident of India.

• The primary objective should be related to arts, education, social welfare, science, research, or charity.

Legal Requirements for Section 8 Company Registration

• Minimum Directors: Two for a private limited structure, three for a public limited company.

• Members: Maximum 200 for private limited companies; no cap for public limited.

• Capital Requirement: No minimum capital requirement.

• Objectives: The company’s MOA and AOA must explicitly state non-profit objectives.

Documents Required for Section 8 Company Registration

• MOA and AOA

• Declaration by Directors and Subscribers

• Registered Office Address Proof (Utility bill, Rent Agreement, NOC)

• Identity and Address Proof of Directors and Subscribers

• Digital Signature Certificate (DSC)

• Director Identification Number (DIN)

Section 8 Company Registration Process

Step 1: Obtain Digital Signature Certificate (DSC)

All proposed directors must obtain a DSC for online filing with the Ministry of Corporate Affairs (MCA).

Step 2: Obtain Director Identification Number (DIN)

Directors must apply for a DIN, a unique ID issued by MCA.

Step 3: Reserve the Company Name

A unique name must be reserved through MCA's SPICe+ application.

Step 4: File Incorporation Application

Submit Form INC-32, along with MOA and AOA.

Step 5: Obtain Section 8 Company License

Apply for a license using Form INC-12, along with the required documents.

Step 6: Certificate of Incorporation Issuance

Upon approval, MCA issues a Certificate of Incorporation, confirming the Section 8 company’s existence.

Funding for Section 8 Companies

• Foreign Donations: Allowed after obtaining FCRA registration.

• Equity Funding: Companies can issue equity shares to raise capital.

• Domestic Donations: No restrictions, but proper compliance is necessary to prevent money laundering.

Register Your Section 8 Company with Expert Salah

Expert Salah simplifies Section 8 Company registration by ensuring compliance with all legal formalities. Our team of professionals guides you through documentation, name approval, and incorporation, ensuring a seamless experience.

Start your Section 8 Company registration today with Expert Salah. Contact us now!