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Section 8 Company

It is not that all the companies Registered are for making Profit, there are certain companies which are created to promote a public cause such as promotion of art, science, commerce etc. Normally charitable activities would be carried out by Trust or Society, in the same way even a company can be formed as per Section 8 of the Indian companies Act. 

What does section 8 of Indian Companies Act says

Section 8- Formation of companies with charitable objects, etc

(1) Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company—

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

Characteristics of Section 8 company

Charitable purpose

A company with the objection of promoting commerce, art, science, education, research, sports, charity, social welfare, religion, protection of environment or any such other object. The investors cannot take any dividend out of the profit.

License Required

A section 8 company is obligated to obtain a license from the central government under section 8 of the companies act 2013 and by that this company can receive donations from other general public for the purpose, which it is formed for. 

Non profit

The Company must intend to utilise the profit or any other income in promoting the social objects of the company. It must intend to prohibit the payment of any dividend to its members.

All the benefits of a private limited company 

Section 8 company, which is registered under Indian Companies Act, can enjoy all the benefits as like a private limited company, such as Limited Liability, independent legal entity and many more. 

Minimum Requirements

1. Members: as like a private limited company, sevn a section 8 company requires minimum 2 members. Even a NRI or a foreign citizen can be a member. 

2. Director: Minim it requires 2 directors to form a Section 8 company registration India. And one director should compulsorily be an Indian resident. 

3. Office Space: The company should hold an office space within Indian Territory. Proof the same to be submitted during the registration process

4. Capital: There is no minimum requirement of capital as per the companies act. 

Documents required 

Aadhar card of all the members

PAN Card of all the members 

Passport size photo of all the members

Residencial proof of all the members

Rental agreement for the office premises

Utility bill for the office premises 

Registration Process 

Company Name Approval 

DSC

DIN

INC 12 - Central Government Licence

Issuance of Licence

Issuance of Certification of Incorporation

Advantages of being a Section 8 Company

Tax Benefit: Section 8 companies are granted Tax benefits as per Income Tax Act

Eligibility for Receiving Donation: As like a NGO, even Section 8 Companies can collect donation from individuals or from Organisations

Credibility: Stakeholders and others will have more credibility