A Section 8 Company is a special type of non-profit organization registered under Section 8 of the Companies Act, 2013 in India. It is formed with the objective of promoting arts, commerce, science, education, research, sports, charity, social welfare, religion, environmental protection, or any other charitable purpose.

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Key Characteristics of a Section 8 Company

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• Non-Profit Objective: The core aim is to promote social welfare and charitable activities.

• No Dividend Distribution: Profits cannot be distributed to the members.

• License from Central Government: They operate under a license issued by the Ministry of Corporate Affairs (MCA).

• Limited Liability: Members' liability is usually limited by the memorandum.

• Separate Legal Entity: It has a legal existence independent of its members.

• Perpetual Succession: The company continues to exist even if the members change.

• No Minimum Share Capital: Unlike other companies, there's no prescribed minimum paid-up capital requirement.

• Name Flexibility: They can operate without the suffix "Limited" or "Private Limited". Instead, words like "Foundation", "Association", "Federation", etc., can be used.

• Tax Benefits: They can avail various tax exemptions under the Income Tax Act.

• Increased Credibility: Being registered under the Companies Act gives them more credibility compared to trusts or societies.

 

Registration Procedures for a Section 8 Company

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1. Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN): All proposed directors need a DSC for online form submission and a DIN.

2. Name Reservation: Apply for a unique name for the company through the RUN (Reserve Unique Name) facility on the MCA portal. The proposed name should align with the company's objectives and can include words like "Foundation," "Association," etc.

3. Apply for a Section 8 License: File Form INC-12 with the Registrar of Companies (ROC) to obtain a license under Section 8 of the Companies Act, 2013. This is a crucial step before incorporation. You need to state the proposed objectives and demonstrate the intention to work for the promotion of these objectives without profit distribution.

4. Prepare Memorandum of Association (MOA) and Articles of Association (AOA): These are the charter documents outlining the company's objectives and rules. The MOA (in Form INC-13) must clearly state the non-profit objectives.

5. Prepare Other Necessary Documents:

   • Identity and address proof of directors and shareholders (PAN, Aadhaar, Voter ID, etc.).

   • Passport-sized photographs.

   • Proof of registered office address (rent agreement, utility bill, NOC).

   • Declaration by the applicant in Form INC-14.

   • Declaration by the proposed directors in Form INC-9 and Form DIR-2.

   • An estimate of the future annual income and expenditure for the next three years.

6. File Incorporation Documents with MCA: Submit the SPICe+ form (INC-32) along with the MOA (e-MOA - INC-33), AOA (e-AOA - INC-34), the Section 8 license (once approved), and other necessary attachments on the MCA portal. These forms need to be digitally signed.

7. Obtain Certificate of Incorporation: Once the ROC is satisfied with the documents, a Certificate of Incorporation will be issued, along with a unique Company Identification Number (CIN).

8. Post-Incorporation Formalities:

   • Obtain PAN and TAN.

   • Open a current bank account in the company's name.

   • Appoint the first auditor within 30 days.

   • Comply with annual filing requirements (financial statements, annual returns).

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Advantages of Registering as a Section 8 Company

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• Tax exemptions.

• No stamp duty on MOA and AOA.

• No minimum share capital requirement.

• Option to use names without "Limited" or "Private Limited".

• Separate legal entity and perpetual succession.

• Higher credibility compared to other NGOs.

• Eligibility for foreign contributions.

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Disadvantages of Registering as a Section 8 Company

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• Profits cannot be distributed to members.

• More stringent regulatory compliance compared to trusts or societies.

• Any changes to the MOA or AOA require prior approval from the Central Government.

• The license can be revoked by the Central Government for non-compliance or fraudulent activities.

• Restrictions on amalgamation (can only merge with other Section 8 companies with similar objectives).

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Post-Incorporation Compliance

• Open a company bank account

• Apply for 12A and 80G registration under Income Tax Act

• Maintain proper books of accounts and annual filings with ROC

• Conduct Board and General Meetings as per law

• Apply for FCRA license (if accepting foreign donations)

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Documents Required 

• Director’s PAN & Aadhar

• Passport-size photographs

• Address proof (Bank statement, Utility bill)

• Registered office proof

• NOC from owner (if rented office)

• Objectives and financial plan of the company