Section 8 Company

The Companies Act defines a Section 8 company as one whose objectives is to promote fields of arts, commerce, science, research, education, sports, charity, social welfare, religion, environment protection, or other similar objectives. These companies also apply their profits towards the furtherance of their cause and do not pay any dividend to their members.

Advantages of a Section 8 Company

Distinct Legal Identity: Section 8 Company has a separate legal entity distinguishable from its members. The Company has perpetual existence along with having organized operations and greater flexibility.

Zero Stamp Duty: A Section 8 Company is exempt from the requirement of paying stamp duty on the MOA and AOA of the private or public limited company, which is applicable for registration of other kinds of company structures.

No Minimum Capital Requirement: No minimum capital limit has been mentioned for a Section 8 Company in India. And the capital structure can be altered at any stage as per the growth requirements of the company. This implies that it can be formed without any share capital. The funds necessary for carrying the business operations can be brought, later, in the form of donations and/or subscriptions from members and the public.
Name: Section 8 Company is not required to use the suffix “Public Limited or Private Limited”, after its legal name. It can be registered with names such as “Association, Society, Council, Club, Charities, Foundation, Academy, Institute, Organization, and Federation”.

CARO: Requirements of Companies Auditor’s Report Order or CARO do not apply to this type of company.

Tax Benefits: For Section 8 Companies in India, many tax benefits are granted.

Credibility: Section 8 Companies are more reliable than all other forms of charitable organizations. They are governed by the Companies Act and are regulated strictly. Such as the requirement of a mandatory annual audit, and both the “MOA and AOA” cannot be altered at any stage or situation. The rules on managing the profits and losses of the company make these companies trustworthy.

Exemption to the donors: Those donating to a Section 8 Company are eligible for tax exemptions u/s 12A and 80G of the Income Tax Act.

Membership: A registered partnership firm can become a member in its individual capacity and obtain Directorship.

Documents required for the Registration of a Section 8 Company

  • PAN card or Passport.
  • Voter ID/Driving license.
  • DSC of Directors.
  • DIN for all the Directors. Copy of latest bank statement/telephone/mobile bill/electricity gas bill.
  • Scanned passport-sized photograph specimen signature blank document with signature [Directors only]
  • Sale deed/property deed (in case of owned property)
    NOC or rent agreement from the owner of the premises.
  • Include drafting of Physical MoA and AoA of the Section 8 Company and Registration of the Company under Section 80G of the Income Tax Act, 1961 post- incorporation in the scope of work for Incorporation of a Section 8 Company.