Section 8 Company



In India, there are mainly the following types of non-profit organizations:

Section 8 Company as per Companies Act, 2013 (Section 25 as per Companies Act, 1956)

Societies registered under Section 20 of the Societies Registration Act 1860

Trusts formed under Indian Trusts Act 1880

However, Section 8 Companies are considered best due to its systematic constitutional framework. The financial statements, directors’ report and other important documents of a Section 8 Company are easily available online on public inspection and are therefore, considered most reliable.

A Non-profit Company or Section 8 Company is a Company which:

  • Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;
  • Intends to apply its profits, if any, or other income in promoting its objects; and
  • Intends to prohibit the payment of any dividend to its members.

Benefits of Section 8 Company Registration

  • Exemption from Stamp Duty.
  • Tax deductions to the donors of the Company u/s. 80G of the Income Tax Act.
  • Section 8 Companies can be formed with or without share capital, in case they are formed without capital, the necessary funds for carrying the business are brought in form of donations, subscriptions from members and general public.
  • Section 8 Companies are not required to add the suffix Limited or Private Limited at the end of their name.
  • It has more credibility as compared to any other Non-profit organization structure like Trust or Society.

Procedure for Incorporation of Section 8 Company under Companies Act, 2013

1. Application for name availability in form RUN

  • Application for name availability must be made in “Reserve Unique Name” facility. The name of Section 8 Company shall include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral Trust, and the like etc.
  • You can propose maximum 2 names at a time and 1 resubmission is allowed in RUN facility. It is advisable to attach the object clause of the proposed company.

2. Preparation of Memorandum of Association and Articles of Association

  • Memorandum of association is the charter of the company and defines the scope of its activities. An article of association of the company is a document which regulates the internal management of the company.
  • Memorandum of Association must be in form INC-13 while there is no format prescribed for Articles of Association. One can adopt table F provisions.
  • Memorandum and articles of association of the company shall be signed by each subscriber to the memorandum who shall mention his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, description and occupation.

3. Application in Form INC-12

  • After receiving Central Government approval i.e approval of form INC-12, one may go ahead with filing of form SPICe 32.
  • Attachment of SPICe 32:
  • Memorandum of Association in Form INC-13;
  • Articles of Association; (No Specified format)
  • Consent and Declaration by first Directors in form DIR-2;
  • Affidavit by first subscriber in form INC-9;
  • PAN card of first directors and subscribers;
  • Aaadhar card of first directors and subscribers;
  • Proof of Registered office like Sale Deed/Lease Deed/Rent Agreement etc;
  • NOC of owner/director if registered office is taken on rent/lease;
  • License issued in form INC-16;
  • SPICe 33 and 34 i.e e-MOA and e-AOA can’t be used for Section 8 Company. Section 8 companies are mandatorily required to file MOA and AOA as pdf attachments to SPICe-32.

4. Filing of SPICe 32 Form

  • After approval of name by CRC, one can make an application in Form INC-12 to the Registrar for a license under sub-section (1) of section 8.
  • Attachment of INC-12
  • Memorandum of Association in Form INC-13;
  • Articles of Association; (No Specified format)
  • Declaration in Form INC-14 by CS/CA/CWA in practice, that the draft memorandum and articles of association have been drawn up in conformity with the provisions of section 8 and rules made thereunder and that all the requirements of the Act and the rules made thereunder relating to registration of the company under section 8 and matters incidental or supplemental thereto have been complied with;
  • Declaration by each of the persons making the application in Form INC-15;
  • An estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure;
  • Name Approval Letter received from CRC;
  • These are compulsory attachment of form INC-12. It is advisable to attach note on work proposed to be undertaken by the Company after incorporation and Grounds of application for issue of license under section 8.
  • Once the form INC-12 will be approved, License under section 8 will be issued in Form INC-16 which required to be attached in form SPICe.

Important Exemptions:

  • A general meeting may be called by giving notice not less than 14 clear days instead of 21 clear days.
  • It shall be enough for a Section 8 Company to hold at least one meeting within every six calendar months instead of holding four meetings a year.
  • Recording of minutes of General Meetings, Board Meeting and other resolutions has been withdrawn. However, the minutes of meetings may be recorded within 30 days of conclusion of the meeting in cases where the company’s articles provide for confirmation by way of circulation of minutes.
  • Conditions requiring and governing appointment of independent directors have also been waived off.
  • Any person can be appointed as Company Secretary even if he/she is not a member of Institute of Company Secretaries of India.
  • The maximum limit of 15 directors and appointment of more than 15 directors by passing special resolution has been withdrawn.
  • The bar on taking up directorship in more than 20 companies has been relaxed.
  • A firm can even be a member of a Section 8 Company.

Tax Benefits:

Section 8 Company is a non-profit organization that is why they are exempted from some provisions of the income tax. They are also given numerous other deductions and other tax benefits. One of such exemption is under Section 80G of the Income Tax Act, 1961, whereby donors to non-profit organizations may claim a 50% rebate against donations made. The registration accorded under Section 80G shall be valid for normally a period of one-three years.


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