Whether you own or manage a Section 8 Company (or plan to in future), you need to be aware of certain details that will prevent complications in future.
For example, what is a Section 8 company?
What does it do?
Who are its promoters, directors or members?
What are some of the provisions guiding its operations?
For answers to all these questions, keep reading this guide!
Definition of Section 8 company: what is it and what does it do?
A Section 8 company is regulated by the Indian Companies Act, 2013.
Its main objective is to promote research, social welfare, religion, charity, commerce, art, science, sports or education, or to protect the environment.
Unlike for-profit companies, a Section 8 company is registered for charitable or not-for-profit purposes, and intends to apply its profits or other income (if any) in promoting such objects. It cannot use its funds to support any regulation or restriction which would/could make it a trade union.
In some ways, a Section 8 company is similar to a Trust or Society. However, unlike a Trust or Society which is registered under State Government regulations, a Section 8 company is registered under the Central Government’s Ministry of Corporate Affairs (MCA).
A Section 8 company can be formed either as a public company or as a private company. Its name must be in consonance to its objects.
A crucial feature of a Section 8 company is that it intends to prohibit the payment of any dividend to its members.
What are the minimum requirements for forming a Section 8 company?
To form a Section 8 company, there must be a minimum of two shareholders and/or two Directors (the directors and shareholders can be the same person or persons). At least one of the Directors must be a resident of India. During registration, Indian nationals must provide income tax and PAN details, valid identity proof (Voter ID card, Aadhaar card, driving license or passport) as well as valid proof of residence (electricity bill, telephone bill, mobile bill or bank statement).
In case of foreign nationals, passport is a mandatory requirement as proof of identity.
Proof of the registered office address must also be provided (rent agreement, latest rent receipt, copy of the latest utility bill in the name of the landlord, a no objection certificate from the owner of the premises in case the premises are rented). If the office premises are owned by either the Director or Promoters, any document establishing ownership such as Sale Deed, House Tax receipt etc must be provided along with the no objection certificate.
Who are the people involved in a Section 8 company?
- Promoters
- Natural person
- Company whether incorporated under India or outside India
- A partnership firm
- Members and Promoters
- In case of Public company: Minimum 7 members, no maximum limit
- In case of Private Company: Minimum 2 members, maximum 200 members
- Directors
- In case of Public Company: Minimum 3 directors, maximum 15 directors
- In case of Private company: Minimum 3 Directors, maximum 15 Directors
How much paid-up capital is required?
There is no requirement of minimum capital to set up a Section 8 company.
Any amount of contribution can be made by promoters of the company provided every promoter contributes such amount.
In addition to the above, are there are miscellaneous provisions I need to know about?
- Amalgamation: A Section 8 Company can be amalgamated or merged with another company having the same objects
- License revocation: The Central Government can revoke the license of a Section 8 company if it contravenes any of the provisions applicable to it
- Change of objects: The memorandum and articles of a Section 8 company can only be changed after gaining the approval of the Central Government
- Consequences of default: If the Company contravenes any of its provisions, it can be punished with a fine from Rs. 10 lakh to Rs. 1 crore. Furthermore, the directors shall be punishable with imprisonment of 3 years or a fine (Rs 25 thousand to Rs 25 lakhs) or both.
Advantages Section 8 companies under Company Law
There are many advantages for Section 8 companies:
- The process of forming a Section 8 company is easy
- Minimum paid-up capital is not required
- It is exempt from stamp duty registration
- Any registered partnership firm(s) can be a member in its individual capacity
- Donors get tax deduction benefits u/s 12AA and u/s 80G of the Income Tax Act
Procedure to register a Section 8 company
Here is the step-wise procedure to register a Section 8 company in India:
- Arrange for all the documents mentioned in the section What are the minimum requirements for forming a Section 8 company?
- At least one promoter and every director gets a Digital Signature Certificate (if they don’t have it already)
- Obtain the Directors Identification Number (DIN) from the MCA
- Apply for the name of the company
- Draft the Memorandum of Association and Articles of Association of the proposed company
- Obtain the license under section 8 of new companies with a charitable objective (form + fees)
Get Certificate of Incorporation: If after filing all requisite forms and paying the prescribed fees, the ROC is satisfied with application, it will grant the company its Certificate of Incorporation (COI) as a Section 8 company.
Taxguru helps business owners successfully navigate India’s complex legal and regulatory environment. If you have further questions about this article, contact us @
Phone: 022-2308-0666, +91 9224618250
Email: info@mytaxguru.net
Disclaimer: The information is provided purely for informational and educational purposes only. It should not be misconstrued as legal advice. Taxguru cannot take any responsibility for the result or consequences of any attempt to use or adopt any of the information presented herein.
Whether you own or manage a Section 8 Company (or plan to in future), you need to be aware of certain details that will prevent complications in future.
For example, what is a Section 8 company?
What does it do?
Who are its promoters, directors or members?
What are some of the provisions guiding its operations?
For answers to all these questions, keep reading this guide!
Definition of Section 8 company: what is it and what does it do?
A Section 8 company is regulated by the Indian Companies Act, 2013.
Its main objective is to promote research, social welfare, religion, charity, commerce, art, science, sports or education, or to protect the environment.
Unlike for-profit companies, a Section 8 company is registered for charitable or not-for-profit purposes, and intends to apply its profits or other income (if any) in promoting such objects. It cannot use its funds to support any regulation or restriction which would/could make it a trade union.
In some ways, a Section 8 company is similar to a Trust or Society. However, unlike a Trust or Society which is registered under State Government regulations, a Section 8 company is registered under the Central Government’s Ministry of Corporate Affairs (MCA).
A Section 8 company can be formed either as a public company or as a private company. Its name must be in consonance to its objects.
A crucial feature of a Section 8 company is that it intends to prohibit the payment of any dividend to its members.
What are the minimum requirements for forming a Section 8 company?
To form a Section 8 company, there must be a minimum of two shareholders and/or two Directors (the directors and shareholders can be the same person or persons). At least one of the Directors must be a resident of India. During registration, Indian nationals must provide income tax and PAN details, valid identity proof (Voter ID card, Aadhaar card, driving license or passport) as well as valid proof of residence (electricity bill, telephone bill, mobile bill or bank statement).
In case of foreign nationals, passport is a mandatory requirement as proof of identity.
Proof of the registered office address must also be provided (rent agreement, latest rent receipt, copy of the latest utility bill in the name of the landlord, a no objection certificate from the owner of the premises in case the premises are rented). If the office premises are owned by either the Director or Promoters, any document establishing ownership such as Sale Deed, House Tax receipt etc must be provided along with the no objection certificate.
Who are the people involved in a Section 8 company?
- Promoters
- Natural person
- Company whether incorporated under India or outside India
- A partnership firm
- Members and Promoters
- In case of Public company: Minimum 7 members, no maximum limit
- In case of Private Company: Minimum 2 members, maximum 200 members
- Directors
- In case of Public Company: Minimum 3 directors, maximum 15 directors
- In case of Private company: Minimum 3 Directors, maximum 15 Directors
How much paid-up capital is required?
There is no requirement of minimum capital to set up a Section 8 company.
Any amount of contribution can be made by promoters of the company provided every promoter contributes such amount.
In addition to the above, are there are miscellaneous provisions I need to know about?
- Amalgamation: A Section 8 Company can be amalgamated or merged with another company having the same objects
- License revocation: The Central Government can revoke the license of a Section 8 company if it contravenes any of the provisions applicable to it
- Change of objects: The memorandum and articles of a Section 8 company can only be changed after gaining the approval of the Central Government
- Consequences of default: If the Company contravenes any of its provisions, it can be punished with a fine from Rs. 10 lakh to Rs. 1 crore. Furthermore, the directors shall be punishable with imprisonment of 3 years or a fine (Rs 25 thousand to Rs 25 lakhs) or both.
Advantages Section 8 companies under Company Law
There are many advantages for Section 8 companies:
- The process of forming a Section 8 company is easy
- Minimum paid-up capital is not required
- It is exempt from stamp duty registration
- Any registered partnership firm(s) can be a member in its individual capacity
- Donors get tax deduction benefits u/s 12AA and u/s 80G of the Income Tax Act
Procedure to register a Section 8 company
Here is the step-wise procedure to register a Section 8 company in India:
- Arrange for all the documents mentioned in the section What are the minimum requirements for forming a Section 8 company?
- At least one promoter and every director gets a Digital Signature Certificate (if they don’t have it already)
- Obtain the Directors Identification Number (DIN) from the MCA
- Apply for the name of the company
- Draft the Memorandum of Association and Articles of Association of the proposed company
- Obtain the license under section 8 of new companies with a charitable objective (form + fees)
Get Certificate of Incorporation: If after filing all requisite forms and paying the prescribed fees, the ROC is satisfied with application, it will grant the company its Certificate of Incorporation (COI) as a Section 8 company.
Taxguru helps business owners successfully navigate India’s complex legal and regulatory environment. If you have further questions about this article, contact us @
Phone: 022-2308-0666, +91 9224618250
Email: info@mytaxguru.net
Disclaimer: The information is provided purely for informational and educational purposes only. It should not be misconstrued as legal advice. Taxguru cannot take any responsibility for the result or consequences of any attempt to use or adopt any of the information presented herein.