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Written by Nithya, Reviewed by Sushmitha Pawar. Last updated on May 28 2024, 11:33 AM

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Section 8 Company Registration

Overview

Benefits

Eligibility Criteria

Documents Required

Registration Process

Types

Eligibility

Registration Fees

Why Vakilsearch

FAQs

Section 8 Company Registration FAQ's

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Section 8 Company Registration Overview

A Section 8 Company is a non-profit organization incorporated under the Companies Act, 2013 in India. It is established to promote objectives such as:

Section 8 Company Registration Overview

A Section 8 Company does not give its members dividends from its income as other types of companies do. Instead, all profits or surpluses are put back into the business to help achieve the goals on which it was founded. 

A Section 8 Company provides several advantages for those aiming to establish a non-profit organization focused on charitable activities, education, social causes, or environmental protection. Below are the benefits:

Benefits of a Section 8 Company

Benefits of a Section 8 Company

A Section 8 Company Registration provides formal legal recognition under the Companies Act, 2013. This enhances credibility, making it easier to:

Legal Recognition

Section 8 Companies enjoy multiple tax advantages under the Income Tax Act, including:

Tax Benefits

The Board of Directors and members have limited liability, protecting their personal assets from organisational debts or liabilities. This ensures financial security for those managing the company.

Limited Liability

There is no minimum paid-up capital needed for the incorporation of a Section 8 Company. This allows founders to start operations with minimal financial burden.

No Minimum Capital Requirement

A Section 8 Company is a separate legal entity, meaning it can:

Distinct Legal Entity

Section 8 companies are exempted from stamp duty on their incorporation; this is different from other company types. This cost-saving feature simplifies registration and reduces financial burdens, thus making them more fascinating for nonprofit organisations.

No Stamp Duty

They have high credibility due to the strict regulation and monitoring by the government. Their nonprofit status addresses the concerns of stakeholders, donors, and society about dedication towards real charitable and social purposes.

Credibility

Section 8 companies do not require the use of the title 'Private Limited' or 'Limited' as it is in private limited companies. This special title identifies them with nonprofit objectives and is different from other companies.

No Title Required

Contributions and donations made to Section 8 companies can be claimed as deductions under Section 80G of the Income Tax Act, 1961. Such companies are an attractive destination for philanthropic donations and funding.

Tax Exemption

Section 8 companies qualify for various grants and government funds to perform social and philanthropic activities, enhancing their operational abilities.

Government Grants

Ownership of a Section 8 company is transferable with less complicated procedures which makes it convenient for change of ownership and to continue operations smoothly.

Transferable Ownership

The Income Tax Act exempted donors for Section 8 companies. Such an incentive inspires more people to donate and be involved in philanthropic activities.

Exemption to Donors

There is no specific share capital requirement in the statute, which means that organisations can direct their resources to their charitable purposes without any financial hurdles.

Low Share Capital

Section 8 companies enjoy perpetual succession, meaning they continue to exist regardless of changes in membership. This ensures long-term stability and sustained operations.

Perpetual Existence

To register a Section 8 Company in India, several forms must be submitted to the Ministry of Corporate Affairs (MCA) as per the Companies Act, 2013. Here’s a detailed list of the required forms and their purpose

Forms Required for Section 8 Company Registration

The company must be formed with an objective to:

1. Purpose/Objective:

2. Number of Members:

3. Legal Status of Members:

4. Directors:

There is no minimum capital requirement, but sufficient capital must be declared in the application to achieve the intended objectives.

5. Capital Requirements:

6. Approval from Authorities:

The company’s income cannot be distributed as dividends. It must be reinvested in the organization’s objectives.

7. No Profit Distribution:

To establish a Section 8 Company under the Companies Act, 2013, the following eligibility conditions must be met:

Eligibility Criteria for Registering a Section 8 Company

Here is the complete checklist of requirements to ensure a smooth registration process:

Checklist for Registering a Section 8 Company

Obtain DSC for all proposed directors to file forms electronically.

Digital Signature Certificate (DSC)

DIN is mandatory for all proposed directors. Apply for DIN if not already obtained.

Director Identification Number (DIN)

Name Approval

Provide proof of a registered office, such as rent agreements or utility bills (not older than 2 months).

Registered Office Address

Prepare a clear and detailed statement of the company’s purpose and its commitment to reinvest all profits in its objectives.

Objective Statement

Pre-Registration Checklist

Apply for the company’s Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).

PAN and TAN Application

Open a bank account in the company’s name to manage transactions.

Bank Account Opening

Apply for tax exemption certificates to attract donors and CSR funding.

Section 12A and 80G Registration

If applicable, register for Goods and Services Tax (GST).

GST Registration

Post-Registration Checklist

Following documents are required to incorporate a Section 8 Company in India include the following:

Documents Required for Incorporating a Section 8 Company

<li style='list-style-type: circle;'>Memorandum of Association (MOA)</li>

<li style='list-style-type: circle;'>Articles of Association (AOA)</li>

<li style='list-style-type: circle;'>Declaration by Directors (INC-9)</li>

<li style='list-style-type: circle;'>Financial Statements</li>

<li style='list-style-type: circle;'>Affidavits and Declarations</li>

Documents for Directors and Members

Each director and member of the proposed Section 8 Company must provide the following:

2. Address Proof (any one of the following):

3. Residential Proof (any one of the following):

5. Director Identification Number (DIN):

6. Digital Signature Certificate (DSC):

Documents for Registered Office

Proof of the address of the company’s registered office:

<li style='list-style-type: circle;'>Ownership Documents (if the premises are owned)</li>

<li style='list-style-type: circle;'>Rental or Lease Agreement (if the premises are rented/leased)</li>

<li style='list-style-type: circle;'>No-Objection Certificate (NOC)</li>

<li style='list-style-type: circle;'>Utility Bill</li>

Section 8 Company Registration Process

The registration process for Section 8 Companies has been streamlined with forms like INC-12, INC-13, and INC-16, ensuring faster incorporation with help from our Chartered Accountants. Section 8 Companies are perfect for non-profit entities seeking legal recognition, financial security, and transparency while working towards charitable goals. Here’s the simplified step-by-step process:

Section 8 Company Registration Process

All directors must obtain a DSC for filing electronic forms.

1. Obtain Digital Signature Certificates (DSC)

Our team applies for DIN using Form DIR-3.

2. Acquire Director Identification Numbers (DIN)

We file Form RUN to reserve the company name, focused on its charitable purpose.

3. Reserve the Name

Vakilsearch experts will prepare the Memorandum of Association (MoA) and Articles of Association (AoA).

4. Draft Legal Documents

We submit Form INC-12 along with supporting documents.

5. Submit License Application

Once approved, the Registrar issues the Section 8 license and Certificate of Incorporation, completing the process.

6. Receive Certificate of Incorporation

Section 8 Companies in India are categorized based on their structure and the nature of their activities. The main types include:

Types of Section 8 Company

Each type is designed to support nonprofit objectives, such as charity, education, or social welfare.

The primary goal is to serve society instead of generating profits. Profits must be utilized for the company’s declared purposes.

Non-Profit Objective

A Section 8 Company enjoys a distinct legal identity from its members. This allows it to:

Separate Legal Entity

Compared to other non-profit structures (such as trusts and societies), Section 8 Companies have better governance due to stricter regulatory frameworks, enhancing trust among stakeholders such as donors and government agencies.

Enhanced Credibility

Section 8 Companies may avail tax exemptions under Sections 12A and 80G of the Income Tax Act, encouraging contributions from individuals and corporations.

They qualify for receiving Corporate Social Responsibility (CSR) funding from private companies, in compliance with CSR provisions under the Companies Act, 2013.

Eligibility for CSR Funding

There is no prescribed minimum share capital requirement for a Section 8 Company. Funds can be raised through subscriptions or donations.

Regular compliance requirements, such as audits and filing of annual returns, ensure that the operations remain transparent and accountable.

Accountability and Transparency

The following are the features of a Section 8 company :

Features of a Section 8 Company

Regular compliance ensures proper utilization of funds and adherence to the company’s objectives.

Facilitates Accountability

A structured platform helps founders systematically achieve charitable goals.

Streamlines Operations:

 By reinvesting resources into the stated objectives, Section 8 Companies ensure sustainable development and social benefit.

Maximizes Social Impact:

Registration ensures adherence to statutory provisions, reducing the risk of misuse of funds or mismanagement.

Legal Compliance and Governance:

Registering a Section 8 Company serves several crucial purposes:

Purpose of Registration

Important Compliance Requirements After Registration

The Companies Act, 2013 governs the formation and operation of Section 8 Companies in India, focusing on charitable objectives. Profits must be reinvested, not distributed.  It Governs the incorporation  and submission of the Memorandum of Association (MOA) and Articles of Association (AOA). Here is a detailed outline of the same: 

Law Governing Section 8 Company in India

1. Section 8 of the Companies Act, 2013:

Governs the incorporation process, including submission of the Memorandum of Association (MOA) and Articles of Association (AOA).

2. Section 7:

 Provide detailed procedural guidelines for obtaining a Section 8 license and its renewal if necessary.

3. Rule 19 and Rule 20 of the Companies (Incorporation) Rules, 2014:

If a Section 8 Company violates its objectives or misuses funds, the license can be revoked, and penalties may be imposed under Section 8(11).

5. Penalties for Non-Compliance:

The primary law governing the formation, management, and operation of Section 8 Companies in India is the Companies Act, 2013. The applicable provisions include:

The Companies Act, 2013

The MCA, through the ROC, scrutinizes the application and supporting documents to ensure alignment with charitable objectives before granting the license.

1. Granting Section 8 Licenses

The MCA enforces filing requirements for annual returns, financial statements, and compliance forms like AOC-4 and MGT-7.

2. Compliance Monitoring

Ensures the company's operations are transparent and that funds are used appropriately.

3. Regulating Governance

The MCA has the authority to revoke the license of a Section 8 Company if:

4. Revocation of License

The Ministry of Corporate Affairs (MCA) is the regulatory body overseeing the incorporation and governance of Section 8 Companies. Its roles include:

Role of the Ministry of Corporate Affairs (MCA)

1. Section 12A

2. Section 80G

3. CSR Funding Compliance

4. GST Exemptions

Section 8 Companies are entitled to specific tax benefits under the Income Tax Act, 1961, provided they fulfill the necessary conditions:

Section 8 in the Income Tax Act and Tax Benefits

Section 8 Company Compliance Requirements

To ensure the smooth functioning of a Section 8 Company, strict compliance requirements must be followed:

Section 8 Company Compliance Requirements

1. Annual Filing Requirements:

Conduct a minimum of two board meetings annually for private Section 8 Companies and four for public companies.

2. Board Meetings:

Keep detailed accounts and records of income and expenditure to reflect the company’s activities.

3. Maintaining Financial Transparency:

File income tax returns annually and ensure compliance with tax exemption provisions.