Section 8 Company
Transform Your Vision into Impact – Helping You Help Others, the Right Way.
What is a Section 8 Company?
A Section 8 Company is a legal entity registered under the Companies Act, 2013, with the objective of promoting charitable activities such as education, art, commerce, science, sports, social welfare, and environmental protection. Unlike other companies, Section 8 Companies do not aim to make profits and are restricted from distributing dividends to their members. All income and profits are applied solely to promote the objectives of the company.
Whether you are looking to start an NGO, a non-profit organization, or a charitable trust, registering as a Section 8 Company offers a structured, credible, and legally compliant way to operate in India. It cannot distribute profits to its members.
🆚 Difference Between Section 8 Company and Normal Trust
| Feature | Section 8 Company | Trust |
|---|---|---|
| Governing Law | Companies Act, 2013 | Indian Trusts Act, 1882 |
| Registration Authority | Registrar of Companies (ROC) | Sub-Registrar or Charity Commissioner |
| Legal Identity | Separate legal entity | Not a separate legal entity (usually) |
| Regulation | Strict (Ministry of Corporate Affairs) | Relatively lenient |
| Transparency | High (mandatory audits, ROC filings) | Limited |
| Governance Structure | Board of Directors | Trustees |
| Name Usage | Can use “Foundation”, “Association” etc. | Cannot use “Company” in the name |
| Fundraising | Easier (can get foreign funds under FCRA, etc.) | Limited |
| Profit Distribution | Not allowed | Not allowed |
📋 Documents Required for Section 8 Company Registration
For Directors and Shareholders:
• PAN Card (mandatory)
• Aadhaar Card / Passport / Voter ID / Driver’s License
• Passport (for foreign nationals)
• Recent passport-sized photo
• Address proof (Utility bill/Bank statement, not older than 2 months)
For Registered Office:
• Rent Agreement (if rented)
• NOC from property owner
• Utility Bill (Electricity, Water, etc.)
Other Documents:
• MOA (Memorandum of Association)
• AOA (Articles of Association)
• Digital Signature Certificates (DSC)
• Director Identification Number (DIN)
Annual Compliances for Section 8 Companies
Compliance is crucial for maintaining legal status, transparency, and credibility. Below are the key annual compliances for Section 8 Companies:
• Filing of Annual Returns (Form AOC-4 and MGT-7): Must be filed with the ROC every financial year.
• Board Meetings: Minimum of two Board Meetings must be conducted every year.
• Statutory Audit: Appointment of a Chartered Accountant to conduct audits.
• Income Tax Return Filing: Mandatory, even if the company is exempt under Section 12A or 80G.
• Maintenance of Statutory Registers: Proper books of accounts and statutory records must be maintained.
• Filing of Director KYC (DIR-3 KYC): Annual compliance for directors.
• Other Event-Based Compliances: Changes in directorship, address, MOA/AOA, etc., must be reported to the ROC.
🧾Process of Registering a Section 8 Company
Our expert team simplifies the registration process into easy steps:
1. Consultation & Documentation: Initial assessment and collection of documents.
2. DSC & DIN Application: Obtain Digital Signature Certificates and Director Identification Numbers.
3. Name Approval (RUN Form): Reserve a unique name for your company.
4. Filing of SPICe+ Form: Submission of incorporation forms with MOA, AOA, and license request to the ROC.
5. License from MCA: Apply for the Section 8 license under Form INC-12.
6. Certificate of Incorporation: Once approved, receive your COI and begin operations legally.
📌 Key Features of Section 8 Company
• No minimum capital requirement.
• Limited liability for members.
• Exempt from using “Private/Public Limited” in name.
• Mandatory annual filing with ROC.
• Can receive foreign donations (subject to FCRA).
• Tax exemptions available under Section 12AA and 80G of Income Tax Act.
FAQs on Section 8 Companies
1. What is a Section 8 Company?
A Section 8 Company is a non-profit organization formed under Section 8 of the Companies Act, 2013, with the primary objective of promoting charitable activities such as education, arts, science, sports, environment, and social welfare. It cannot distribute profits to its members.
2. Who is authorized to issue a license to Section 8 Companies?
The Registrar of Companies (ROC), under the authority of the Central Government, issues the license for Section 8 Companies after examining the objectives and required documents.
3. Is it necessary that Section 8 Companies are incorporated as a limited company with share capital?
No. A Section 8 Company may or may not have share capital. It can be incorporated as a company limited by guarantee, with or without share capital.
4. Can a Company with unlimited liabilities be registered as a Section 8 Company?
No. Section 8 Companies can only be limited companies — either limited by guarantee or by shares. Companies with unlimited liability cannot be registered under Section 8.
5. Is there any relaxation in stamp duty payment during incorporation?
Yes. Section 8 Companies are exempt from stamp duty on the MOA, AOA, and other incorporation documents in most Indian states. However, this varies by state, so local rules should be verified.
6. Can a One Person Company (OPC) be incorporated as or convert into a Section 8 Company?
No. As per the Companies Act, an OPC cannot be incorporated as or converted into a Section 8 Company due to the minimum member and director requirement.
7. Can a Trust become a member of a Section 8 Company?
Yes. A registered Trust can become a member of a Section 8 Company, subject to its trust deed permitting such investment and compliance with the Companies Act.
8. Can Section 8 Companies receive contributions from overseas or non-residents?
Yes. They can receive foreign contributions, but they must register under the Foreign Contribution Regulation Act (FCRA), 2010 and comply with all related rules.
9. Can Section 8 Companies be a holding company of another company?
Yes. There is no restriction under the Companies Act preventing a Section 8 Company from being a holding company, provided that all such actions align with its charitable objectives.
10. Can a Section 8 Company hold a meeting of members with less than 21 days' notice?
Yes, but only if 95% of the members entitled to vote consent (either in writing or electronically) to hold the meeting on shorter notice.
11. Is profit-making allowed in Section 8 Companies?
Yes. Section 8 Companies may generate revenue or profits, but profits must be applied solely towards promoting the company’s objectives and cannot be distributed as dividends.
12. Can foreign nationals be directors in a Section 8 Company?
Yes. Foreign nationals or NRIs can be directors, subject to Indian company law provisions such as DIN, valid documents, and at least one resident Indian director.
13. Is audit mandatory for Section 8 Companies?
Yes. Regardless of income or turnover, statutory audit by a Chartered Accountant is mandatory every financial year.
14. Do Section 8 Companies get tax exemptions?
Yes, they can apply for:
• Section 12AB (for exemption of income)
• Section 80G (for tax deduction to donors)
15. Can a Section 8 Company pay salaries?
Yes. Reasonable salaries or reimbursements can be paid to employees and directors for their services. However, no profits can be distributed as dividends or bonuses.
16. Is there any minimum capital requirement for a Section 8 Company?
No. Section 8 Companies do not require a minimum paid-up capital to be incorporated.
17. Can a Section 8 Company convert into a regular private/public company?
Yes, but only with approval from the Regional Director/NCLT and following a prescribed process.
18. How many members are required to start a Section 8 Company?
• Private Limited: Minimum 2 directors/members
• Public Limited: Minimum 3 directors and 7 members
19. What compliance is required after incorporation?
• Annual filing (AOC-4 and MGT-7)
• Board meetings and AGM
• Income tax filing
• Statutory audit
• Renewal of licenses (12AB, 80G, FCRA if applicable)
