Section 8 Company

A Section 8 Company is registered under the Companies Act, 2013, with the Ministry of Corporate Affairs (MCA) and functions as a Non-Profit Organization (NPO). It requires a minimum of two directors for incorporation and is primarily established to promote charitable, social, and welfare activities. Unlike other companies, a Section 8 Company cannot distribute profits to its members, and all income must be utilized for the organization's objectives. Additionally, directors are not allowed to withdraw salaries or profits, ensuring that the company remains focused on its social mission.
Previously known as a Section 25 Company under the Companies Act, 1956, it was reclassified as Section 8 under the Companies Act, 2013. The primary purpose of a Section 8 Company is to support fields such as education, arts, commerce, science, research, sports, charity, social welfare, religion, environmental protection, and similar causes. Since it operates as a non-profit entity, it enjoys tax exemptions and is not required to maintain a minimum paid-up capital. If any surplus is generated, it must be reinvested in the company’s objectives rather than distributed as dividends.

Procedure for Company Formation

Simple Easy Process

Documentation

Filing Application

Deed Drafting

Verification

Uploading forms

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Name Reservation

A Section 8 Company is incorporated under the Companies Act, 2013, and its name must be unique as per MCA and IP India database guidelines. The name should align with the company’s non-profit objectives and must include terms like "Foundation," "Association," "Society," "Council," or "Organisation." If the proposed name is rejected by MCA, the applicant may be required to submit a No Objection Certificate (NOC) or an affidavit from the concerned authority. Once the RUN (Reserve Unique Name) application is submitted, the name approval status is usually provided within 48 working hours, and an official confirmation email with a PDF copy of the approval is sent to the applicant.

Filing SPICe+ Form

To incorporate a Section 8 Company, Part B of the SPICe+ (INC-32) form must be filed with details provided by the applicant. A structured list is shared with the applicant in an Excel sheet or form, and the information must be accurately filled out, as it will appear on the Certificate of Incorporation. The Director Identification Number (DIR) form is sent to the directors for physical signing. Required supporting documents include identity proof and address proof of directors, utility bill of the registered office, and NOC from the landlord for incorporation approval.

Drafting of MOA & AOA

The Memorandum of Association (MOA) defines the company's social, charitable, or non-profit objectives, along with details of directors, members, and governance structure. It is drafted in INC-33 and must be digitally signed by directors and certified professionals such as CA, CS, CMA, or Advocates. The Articles of Association (AOA) establishes the internal rules and regulations for the company’s management and operation. This is prepared in INC-34 and must be digitally signed by directors and certified professionals before submission.

Drafting of Estimation Report

A Section 8 Company must submit an Estimation Report projecting the income, expenses, and financial planning for the next three years. This report demonstrates the company’s commitment to non-profit objectives and ensures compliance with MCA regulations. After drafting, the directors and board members must physically sign the report before submission.

Know more about Section 8 Company

Benefits Section 8 Registration

A Section 8 Company enjoys several advantages, making it a preferred choice for non-profit organizations. One of the key benefits is tax exemptions under the Income Tax Act, as these companies are eligible for exemptions such as 80G and 12A, allowing donors to claim tax benefits and encouraging funding for social causes. Since Section 8 Companies operate solely for charitable purposes, they are given priority treatment in tax matters, reducing financial burdens.

Another significant advantage is limited liability for directors and members. Unlike other forms of non-profit organizations like trusts or societies, a Section 8 Company provides separate legal entity status, ensuring that its members are not personally liable for debts or liabilities incurred by the company. This safeguards personal assets and brings credibility to the organization’s financial structure.

A Section 8 Company also enjoys a higher level of credibility and trust compared to other non-profit structures. Since it is regulated by the Ministry of Corporate Affairs (MCA) and requires strict compliance, including audits and annual filings, stakeholders, donors, and government bodies view it as a transparent and accountable entity, making it easier to secure grants and external funding.

Unlike private or public limited companies, a Section 8 Company has no minimum capital requirement, making it accessible to individuals and organizations aiming to start charitable or social welfare initiatives. The funds raised can be directly utilized for the company’s objectives, and any surplus must be reinvested into the organization's activities rather than distributed as profits, ensuring a commitment to social welfare.

Section 8 Companies also benefit from exemptions and relaxed regulatory norms. These companies do not have to comply with various provisions that apply to other companies, such as paying stamp duty on incorporation documents. Additionally, they are often given government support and funding opportunities, including eligibility to receive foreign contributions under FCRA (Foreign Contribution Regulation Act), enabling them to expand their reach and impact on society.

Documents Required

Identity proof of director

Address proof of director

Photograph of Director

Contact details of Directors

Utility bill of business place

Certificates You will get!

Allotment of DIN (for directors)

Company PAN & TAN

Incorporation certificates

Spice+ Forms Part A & Part B

MOA - Memorandum of Association

AOA - Articles of Association

Current Account Opening

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