Among the diverse types of companies in India, a Section 8 company stands out as an entity specifically established to dedicate itself to social and charitable causes, actively contributing to the welfare of society. This unique form of organization can be registered either as an NGO or a society, facilitating support for a myriad of charitable activities.

Termed as a Section 8 Company, this classification aligns with non-profit organizations or non-governmental organizations (NGOs) and operates under the regulations outlined in the Companies Act of 2013 in India. The primary mission of a Section 8 company revolves around advancing charitable or social causes, ranging from education and poverty alleviation to healthcare and environmental sustainability.

Some Important Features of a Section 8 Company

A Section 8 company distinguishes itself from other entities through several key features:

1. Non-profit Motive: A fundamental characteristic of a Section 8 company is its non-profit motive. Its primary goal is not profit generation but the promotion of charitable or social causes. Profits earned are mandated to be utilized for advancing the company’s objectives, with no distribution among members.
2. Limited Liability: Similar to other companies, a Section 8 company adheres to the principle of limited liability. The members’ liability is restricted to the extent of their shareholding in the company.
3. No Minimum Capital Requirement: Unlike some other company types, there is no stipulated minimum capital requirement for registering a Section 8 company. However, the company must possess sufficient funds to effectively pursue its objectives.
4. Name Requirements: The name of a Section 8 company must conclude with terms such as “Foundation,” “Association,” “Society,” “Council,” “Charity,” “Institute,” “Organization,” “Trust,” or “Academy.”
5. Registration Process: The registration process for a Section 8 company mirrors that of any other company. It necessitates a minimum of two directors and the submission of requisite documents to the Registrar of Companies (ROC).
6. Tax Benefits: Enjoying eligibility for tax benefits under Section 80G of the Income Tax Act, donations made to a Section 8 company qualify for tax deductions.
7. Annual Compliance: Compliance with annual filing requirements under the Companies Act is obligatory for a Section 8 company. This entails the filing of annual returns and financial statements with the ROC.
8. Governance: A Section 8 company must establish a governing body to manage its affairs. This body is tasked with ensuring the company operates in alignment with its objectives and complies with all relevant laws and regulations.
9. Dissolution: In the event of dissolution, a Section 8 company must adhere to the prescribed procedure under the Companies Act. Assets are required to be transferred to another non-profit organization with similar objectives.

Formation of a Section 8 Company

Before embarking on the establishment of your non-profit company, it is crucial to understand the process of forming a Section 8 company. This brief overview will guide you through the key steps involved in setting up a Section 8 company, whether as an individual or as a group.

To initiate the registration of a Section 8 company, adherence to specific rules and regulations outlined by the Ministry of Corporate Affairs (MCA) is essential.

One critical aspect is selecting a name for your Section 8 company. It must be unique and not already registered elsewhere. Naming considerations are vital, and it’s important to note that certain terms like “private limited,” “limited,” and “public limited” are not permissible for a Section 8 company. Acceptable terms for inclusion in the name can include words like “foundation,” “council,” “federation,” among others. Careful attention to these naming guidelines is imperative during the registration process.

Section 8 Company Documents Requirement and Fees

Registering your Section 8 company necessitates the submission of essential documents, including proof of identity for directors, business address proof, Memorandum of Association (MoA), Articles of Association (AoA), and various other documents that can be efficiently crafted with professional assistance. The registration fee for a Section 8 company commences at Rs 4,999, encompassing both the government fee and the professional fee charged by Auriga Accounting.