In many organizations work toward social welfare, charity, education, healthcare, environment, and other public causes. For such not-for-profit entities, the Section 8 Company structure offers legal recognition with credibility and tax benefits. Governed by the Companies Act, 2013, a Section 8 Company allows people or groups to promote charitable objectives while enjoying limited-liability protection and corporate governance advantages.

What Is a Section 8 Company?

A Section 8 Company is a non-profit organization (NPO) formed to promote:

• Commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or similar objectives.

Instead of distributing profits as dividends, such companies reinvest their surplus into furthering their objectives. This makes them different from normal profit-oriented companies.

Legal Framework

The legal foundation of Section 8 Companies lies in:

• Section 8 of the Companies Act, 2013
• Rule 20 and 21 of the Companies (Incorporation) Rules, 2014
• Notifications by the Ministry of Corporate Affairs (MCA)

Under these provisions, the Central Government (through the Registrar of Companies) grants a license allowing the company to operate for charitable purposes.

Key Features of Section 8 Company

1. Non-profit Objective – The company’s income and profits must be used only for promoting its stated objectives.
2. Limited Liability – Members’ liability is limited to the amount they agree to contribute.
3. Separate Legal Entity – It can own property, enter contracts, and sue or be sued in its own name.
4. Tax Benefits – Eligible companies can apply for Section 12A and 80G registration under the Income-tax Act for tax exemptions.
5. No Minimum Capital Requirement – There is no prescribed minimum share capital to start a Section 8 Company.
6. Use of Suffix – Instead of “Private Limited” or “Limited,” the words Foundation, Association, Forum, Council, Institute, or Federation are usually used in the name

Eligibility Criteria

To incorporate a Section 8 Company in India, the following conditions must be satisfied:

• Two Directors (minimum) – for a private Section 8 Company; three for a public one.
• Two Shareholders (minimum).
• The main objective must be charitable or for public benefit.
• The profits must be used only to further the stated objectives and not distributed to members.
• At least one director must be an Indian resident.

Documents Required for Registration

1. For Directors and Shareholders
• PAN Card
• Aadhaar Card
• Passport (for foreign nationals)
• Proof of Address (latest utility bill or bank statement)
• Passport-size photograph
2. For Registered Office
• Electricity or water bill (not older than 2 months)
• Rent agreement (if rented)
• NOC from property owner
3. Additional Documents
• MOA (Memorandum of Association)
• AOA (Articles of Association)
• Declaration of Charitable Purpose (Form INC-14 & INC-15)
• Estimated annual income and expenditure for next 3 years

Step-by-Step Registration Procedure

1. Obtain Digital Signature Certificate (DSC)

Every proposed director must have a valid DSC to sign electronic documents on the MCA portal.

2. Apply for Director Identification Number (DIN)

DIN is a unique identification number issued by MCA to each director. It can be applied along with the SPICe+ form.

3. Choose a Unique Name

Propose two names using the RUN Service (Reserve Unique Name) or through SPICe+ Part A.
The name should reflect the charitable objective and should not resemble an existing organization’s name or trademark.

4. Prepare MOA and AOA

These define the organization’s vision, mission, activities, and internal rules. They must be drafted to reflect the charitable nature and non-profit intent.

5. File SPICe+ Part B with Attachments

Submit the integrated form SPICe+ Part B along with:

• MOA & AOA
• INC-9 Declaration
• INC-13 (Memorandum template for Section 8)
• INC-14 and INC-15 (declarations by professionals and directors)
• Proof of address and utility bills

6. Verification and License Grant

Once the Registrar verifies the application and is satisfied with the charitable nature of the objectives, a license is issued under Section 8(1).
Thereafter, a Certificate of Incorporation is granted with a unique CIN (Corporate Identification Number).

Post-Incorporation Compliance

After registration, the company must:

1. Open a bank account in the company’s name.
2. Apply for PAN and TAN through MCA forms.
3. Maintain proper books of accounts and get them audited annually.
4. File annual returns and financial statements (Form AOC-4 and MGT-7A).
5. Conduct Board Meetings and AGMs as per Companies Act rules.
6. Renew 12A and 80G registrations (if applicable) for tax benefits.

Tax Benefits and ExemptionsCSR Eligibility – companies can receive funds from other corporates as part of their CSR spending under Section 135 of the Companies Act.

Difference Between Section 8 Company, Trust and Society

Advantages of Forming a Section 8 Company

1. Enhanced Credibility – Recognized by the MCA, which increases trust among donors and government bodies.
2. Tax Exemptions – Eligible for 12A and 80G benefits.
3. Limited Liability – Members’ liability is restricted to their capital contribution.
4. Separate Legal Identity – Can own property, enter contracts, and sue independently.
5. Perpetual Existence – Company continues to exist despite changes in membership.
6. Access to CSR Funds and Grants – Increased eligibility for government and corporate funding.

Restrictions and Limitations

• No Dividend Distribution – Profits cannot be shared among members.
• Stringent Compliance – Annual ROC filings and audits are mandatory.
• Prior Approval for Amendments – Any change in MOA, AOA or objectives needs approval from the Central Government.
• Use of Funds – Funds must be used strictly for charitable purposes.

Revocation of License

Under Section 8(6), the Central Government can revoke the license if the company:

• Violates any provision of Section 8.
• Conducts activities not aligned with its objectives.
• Engages in fraud or mismanagement of funds.

Upon revocation, the company may be converted into a regular private or public limited company or ordered to wind up.

Conclusion

A Section 8 Company is one of the most credible forms of non-profit organization in India, combining social impact with corporate governance and transparency. It provides legal structure, accountability, and tax benefits that enable NGOs and foundations to scale their operations efficiently. Whether your goal is education, environmental protection, healthcare, or rural development, registering under Section 8 of the Companies Act is a smart step toward making a long-lasting social impact.