A Section 8 Company Registration is a special type of legal entity in India established under the Companies Act, 2013, dedicated to promoting charitable objectives such as education, art, science, commerce, religion, and social welfare. These companies reinvest profits into their mission instead of distributing them to shareholders. The term “Section 8” refers to the section of the law under which these entities are registered.
This type of registration offers a structured, credible, and tax-efficient way to run a non-profit organization, aligning with both corporate governance and philanthropic intent.
Objectives of Section 8 Companies
Section 8 Companies are not driven by profit motives. Instead, they work towards:
•Promoting commerce, art, science, and research
•Providing education, environmental protection, and social welfare
•Advancing religion and charitable activities
•Running programs for poverty alleviation, skill development, and empowerment
These companies operate with the public good in mind and must strictly utilize all their income and profits toward the organization’s purpose.
Key Features of a Section 8 Company
•No Dividend Distribution: Members cannot receive profits in any form.
•Limited Liability: Liability of members is limited to their shareholding.
•Separate Legal Entity: The company has its own legal identity, distinct from its members.
•No Minimum Capital Requirement: There’s no restriction on the minimum paid-up capital.
•Tax Benefits: Exemptions under Section 12AA and 80G of the Income Tax Act are available.
Benefits of Registering as a Section 8 Company
1.Tax Exemptions: Significant income tax exemptions for both the entity and its donors.
2.Credibility & Trust: Registration under the Companies Act enhances transparency and builds public trust.
3.Access to Government Grants: Section 8 companies are often preferred for grants and funding schemes.
4.Perpetual Succession: The company continues to exist irrespective of changes in its management.
5.No Stamp Duty: On registration of MoA and AoA, unlike other company types.
Eligibility Criteria for Section 8 Company Registration
To register, the following criteria must be met:
•At least 2 directors for a private limited and 3 for public limited
•At least one director must be an Indian citizen
•Objectives must strictly be non-profit in nature
•The company must plan to apply its profits solely for promoting its objectives
Pre-requisites Before Registration
1. Digital Signature Certificate (DSC): Every proposed director must obtain a DSC to sign electronic documents.
2. Director Identification Number (DIN): DIN is required to identify and authorize individuals acting as directors.
Step-by-Step Section 8 Company Registration Process
Step 1: Reserve a Unique Name (SPICe+)
Choose a suitable and unique name using the RUN (Reserve Unique Name) service on the MCA portal.
Step 2: Drafting MOA & AOA
Memorandum of Association (MOA) and Articles of Association (AOA) define the scope, rules, and regulations.
Step 3: Apply for License via Form INC-12
This includes:
•Objectives of the company
•Draft MOA & AOA
•Financial projections
Step 4: Filing Forms with ROC
Forms like SPICe+ INC-32, AGILE-PRO, and INC-22 must be submitted.
Step 5: License Approval & Incorporation
After thorough scrutiny, the Registrar of Companies (ROC) issues the incorporation certificate and license under Section 8.
Important Documents Required
•PAN, Aadhaar, and passport-sized photo of directors
•Proof of registered office (rent agreement or ownership proof)
•Utility bills (not older than 2 months)
•MOA and AOA drafts
•Financial projections (3 years)
•Declaration from professionals (CA/CS)
Timeline for Registration
On average, the process takes 15–25 working days depending on:
•Document readiness
•Government approval delays
•Number of directors involved
Post Registration Compliances
•Maintain Books of Accounts
•Annual Filing of Returns
•Holding Board Meetings
•Conducting Audits
•Income Tax Returns
•Compliance with FCRA (if accepting foreign donations)
Common Mistakes to Avoid During Registration
•Selecting a non-unique or misleading name
•Submitting incomplete documents
•Not aligning the MOA with the non-profit objectives
•Failing to file necessary declarations and affidavits
•Missing professional certification where needed
Revocation or Cancellation of License
ROC can revoke a Section 8 license if:
•Profits are misused
•Objectives are violated
•Legal provisions are not followed
Restoration requires a court order or fresh incorporation.
Conclusion
Registering a Section 8 Company is an ideal way to give structure and credibility to your non-profit initiative. Whether you’re working in education, healthcare, environment, or community development, this framework offers transparency, tax relief, and public trust. With proper guidance and compliance, your organization can make a significant impact and attract funding for a better cause.
FAQs About Section 8 Company Registration
Q1. What is the minimum number of members?
Ans. Private limited: 2; Public limited: 7
Q2. Is PAN mandatory for directors?
Ans. Yes, for Indian directors.
Q3. Can foreign nationals be directors?
Ans. Yes, provided at least one director is an Indian resident.
Q4. How to close a Section 8 Company?
Ans. By voluntarily winding up or through ROC order, ensuring all compliance is cleared.
Q5. Can a Section 8 Company be converted into a private limited company?
Ans. No, conversion into a profit-making entity is not permitted.
Q6. What activities are allowed under Section 8?
Ans. Only those aligning with charitable, religious, or social objectives.