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Section 8 Company
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Section 8 Company
About Section 8 Company
A Section 8 Company is the same as the popular Section 25 company under the old Companies Act, 1956, which was one of the most popular forms of Non- Profit Organisations in India. But, as per the new Companies Act 2013, Sec 25 under the old act has now become Section 8.
As per Section 8(1a, 1b, 1c) of the new Companies Act, 2013, a Section 8 company can be established for “promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object”, provided it “intends to apply its profits, if any, or other income in promoting its objects” and “intends to prohibit the payment of any dividend to its members.”.
To register a section 8 company in India, the process is similar to the incorporation of other companies. The applicant looking to start a section 8 company is required to file Form INC-1 for name availability. Once the name is approved, there is a further requirement of obtaining a license for a Section 8 Company, for which Form RD-1 is to be filed in order to obtain a license for such company. After obtaining license number, applicant can proceed further to incorporate a company by filing e forms INC-7, INC-22 and DIR-12 or e-forms INC-7 and DIR-12 as the case may be.
As per Section 8, the provisions in Company Act 2013 states:
Section 8 Formation of Company with Charitable Objects
Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company:
- has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object
- intends to apply its profits, if any, or other income in promoting its objects; and
- intends to prohibit the payment of any dividend to its members, the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.
- the company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited companies.
Document Required
- PAN Card of proposed Directors
- Latest Photographs of the proposed directors
- Electricity / Water / Telephone Bill / Bank Account Statement of the proposed directors
Benefits
Tax Exemption
Companies can claim the Tax exemption against the donation they made to a Section 8 company.
No minimum Capital Requirement
There is no prescribed limit over section 8 companies for the minimum capital requirement unlike other entities such as public limited, but the capital structure can be altered at any stage as the required for the growth of the company.
Separate Legal entity
A Section 8 Company holds its own identity like other companies structures, and has its own separate legal standing from its member. A Section 8 Company also has a perpetual existence.
No title required
Unlike the names requirements of the private limited or a public limited company, a section 8 company does not require to use a suffix next to its name.
Ou package includes all the essentials to start the Section 8 Company. It includes 3 Digital Signature Certificates, 3 DIN, Section 8 License, Drafting of MOA & AOA, Name approval, PAN, TAN, MSME Registration
