way2registration | Section 8 Company

What is Section 8 Company ?

A Section 8 Company in India is a special category of non-profit organization governed under Section 8 of the Companies Act, 2013. Designed for companies that operate with the primary objective of promoting arts, commerce, charity, education, religion, social welfare, or any other useful object, Section 8 Companies are exempt from certain regulatory requirements applicable to profit-making entities. This structure is ideal for organizations that aim to make a positive impact without the intention of distributing profits to shareholders.

Features of a Section 8 Companies

Key Features of a Section 8 Companies
● Non-Profit Objective: The primary objective of a Section 8 Company must be to promote charitable causes, social welfare, education, religion, or other community-benefitting activities. These companies must use their profits, if any, solely for these objectives and not distribute them among members.● Limited Liability: Like other companies, Section 8 Companies are separate legal entities with limited liability for their members. This means that the personal assets of the members are protected from the company's liabilities.● Regulatory Exemptions: Section 8 Companies benefit from certain regulatory exemptions. They are not required to use the words “Limited” or “Private Limited” in their name, which is a mandatory requirement for other companies.● No Share Capital Requirement: Section 8 Companies are not required to have share capital. They can operate based on the contributions and donations received for their charitable activities.● Governance and Management: These companies are governed by a Board of Directors. They must follow the same governance standards as other companies but with a focus on their non-profit objectives.
Registration Process for a Section 8 Company
● Obtain Digital Signature Certificates (DSC): All proposed directors must obtain Digital Signature Certificates, which are required for online filing of documents.● Apply for Director Identification Number (DIN): Each director must obtain a Director Identification Number from the Ministry of Corporate Affairs (MCA).● Choose a Company Name: Select a name for the Section 8 Company that reflects its non-profit nature. Ensure the name complies with MCA guidelines and does not include terms like “Limited” or “Private Limited.”● Draft the Memorandum and Articles of Association: Prepare the Memorandum of Association (MOA) and Articles of Association (AOA), detailing the non-profit objectives and internal regulations of the company.● Apply for Registration: Submit the registration application to the Registrar of Companies (RoC) along with the MOA, AOA, DIN, DSC, and other required documents. You must also include a license application under Section 8 of the Companies Act, 2013.● Obtain Certificate of Incorporation: Upon processing the application, the RoC will issue a Certificate of Incorporation and a license under Section 8, confirming the establishment of the Section 8 Company.
Compliances for Section 8 Companies
● Annual Filing: Section 8 Companies must file annual returns (Form MGT-7) and financial statements (Form AOC-4) with the RoC. These filings must be completed within the stipulated deadlines.● Maintain Books of Accounts: The company is required to maintain proper books of accounts and records, reflecting its non-profit activities and financial transactions. Annual audits are mandatory.● File Income Tax Returns: Section 8 Companies must file their income tax returns annually using Form ITR-7. They are also eligible for tax exemptions under Section 12A of the Income Tax Act, provided they comply with the requirements.● Governance and Reporting: The company must hold annual general meetings (AGMs) and board meetings as required. Minutes of these meetings must be documented and maintained.● Compliance with Donor Regulations: If the Section 8 Company receives donations, it must adhere to the regulations governing charitable donations and maintain proper records to ensure transparency.● Update Information: Any changes in the company’s registered office, directors, or other significant details must be updated with the RoC to maintain accurate records.
Is a Section 8 Company Right for You?
A Section 8 Company is ideal for organizations focused on charitable, educational, religious, or social welfare activities. It offers a formal structure for non-profits with the benefit of limited liability and certain regulatory exemptions. This structure supports organizations dedicated to making a positive impact while ensuring compliance with regulatory standards.
Before establishing a Section 8 Company, it is advisable to consult with legal and financial professionals to ensure that it aligns with your objectives and complies with all relevant regulations.
Understanding the fundamentals of a Section 8 Company, including registration, compliance, and operational requirements, will help you create a well-structured and compliant non-profit organization in India.

Features of a Section 8 Companies

Compliances for Section 8 Companies

Is a Section 8 Company Right for You?