A Section 8 Company is a non-profit organization formed under Section 8 of the Companies Act, 2013. It is established with the objective of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection, without any intention of profit distribution to its members.
Instead of dividends, all profits or income must be applied toward furthering the objectives of the company. It is an ideal structure for NGOs, charitable organizations, clubs, and trusts seeking credibility, limited liability, and corporate governance.
✅ Formed for charitable or not-for-profit purposes
✅ No dividend distribution to members
✅ Limited liability to members
✅ Enjoys tax exemptions under Section 12A and 80G (after registration)
✅ Treated like a Private or Public Company, with some exemptions
✅ Separate legal identity
| Benefit | Explanation |
|---|---|
| Tax Exemptions | Eligible for 12A and 80G registration for income and donor tax benefits |
| Separate Legal Entity | Can own property, enter contracts, and sue/be sued in its own name |
| No Minimum Capital Requirement | Flexibility to start with any amount |
| Increased Credibility | More trusted by donors, government bodies, and international agencies |
| Limited Liability | Members' liability limited to the amount invested or guaranteed |
| Exemptions under Company Law | Relaxed compliance compared to other companies |
To incorporate a Section 8 Company, the following conditions must be met:
Minimum 2 directors for a Private Limited format, 3 for a Public Limited
At least 2 shareholders/members
At least one Indian resident director
No profit motive or dividend distribution
Proposed company must apply its income and profits solely for promoting its objects
PAN Card
Aadhaar Card
Passport (for foreign nationals)
Address Proof (Utility Bill, Bank Statement)
Passport-size Photograph
Digital Signature Certificate (DSC)
Director Identification Number (DIN)
Name Approval (RUN Form or SPICe+ Part A)
Memorandum of Association (MOA)
Articles of Association (AOA)
Registered Office Address Proof (Rent Agreement/NOC/Utility Bill)
Declaration by Subscribers and Directors (INC-9, DIR-2)
Detailed Objectives of the Company
Digital Signature Certificate (DSC): Obtain DSC for all proposed directors.
Name Reservation: Apply via SPICe+ Part A for name approval (must include words like Foundation, Association, Federation, etc.).
Filing SPICe+ Form: File the integrated SPICe+ form (Part B) with MOA, AOA, declarations, and attachments.
Approval from RD: Apply for a license under Section 8 from the Registrar of Companies (RoC) or Regional Director (if applicable).
Certificate of Incorporation: Once approved, the company is issued a Certificate of Incorporation with a unique CIN.
PAN, TAN, and Bank Account Opening
| Compliance | Details |
|---|---|
| 12A & 80G Registration | Apply to the Income Tax Department for tax exemptions |
| GST Registration (if applicable) | Required if turnover exceeds threshold or for inter-state operations |
| Maintaining Proper Books of Accounts | As per Income Tax and Companies Act |
| Conducting Board Meetings and AGM | Minimum 2 board meetings a year (Private); 4 (Public) |
| Filing Annual Returns (Form AOC-4, MGT-7) | With Registrar of Companies |
| Filing ITR (ITR-7) | Even if income is exempt |
| CSR Compliance (if applicable) | Under Section 135 of the Companies Act |
Cannot pay any dividend to its members
Profits cannot be used for any purpose other than stated objectives
Requires government approval for conversion into a regular company
Subject to revocation of license in case of violation of objectives
| Offence | Penalty |
|---|---|
| Violation of license conditions | Fine up to ₹10 lakh + cancellation of Section 8 license |
| Delay in annual filings | Additional fees + disqualification of directors |
| Misuse of funds | Prosecution + imprisonment up to 3 years |
Q1. Can a Section 8 Company receive donations?
Yes, it can receive domestic and foreign donations (FCRA registration needed for foreign funds).
Q2. Is it mandatory to register under 12A and 80G?
Not mandatory, but highly recommended for income and donor tax exemptions.
Q3. Can a Section 8 Company pay a salary to its employees?
Yes, reasonable salaries can be paid to employees and directors for services rendered.
Q4. Can a Section 8 Company be converted into a Private Company?
Yes, but only with approval from the Regional Director (RD) and compliance with specific conditions.
Q5. What words can be used in the name of a Section 8 Company?
Words like Foundation, Forum, Association, Federation, Society, Council, etc., are preferred.
A Section 8 Company is a powerful legal structure for charitable, social, and non-profit initiatives. With strong legal backing, corporate governance, and potential tax benefits, it enhances the credibility and sustainability of your mission.
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