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- SECTION 8 COMPANY
Key features of a Section 8 Company
include:
Non-profit motive: The primary objective of a Section 8
Company is to promote charitable activities. Any profits or income generated by
the company must be used for promoting its objectives, and no dividends are
paid to the members.
No minimum capital requirement: Unlike some other forms of companies
, there is no minimum capital requirement for forming a Section 8 Company.
Limited liability: Members of a Section 8 Company have
limited liability, meaning their personal assets are not at risk in case the
company faces financial issues.
Income tax exemptions: Section 8 Companies are eligible for
certain income tax exemptions, as their primary focus is on charitable
activities.
Registration process: To establish a Section 8 Company,
one must apply to the Registrar of Companies (RoC) and obtain a license. The
application should include the proposed company's memorandum and articles of
association, along with details of the proposed directors.
Name restrictions: The name of a Section 8 Company must include the words "Foundation," "Forum," "Association," "Federation," "Chamber of Commerce," "Council," "Electoral Trust," etc. Section 8 Companies play a significant role in promoting social welfare and charitable activities in India. They operate in various fields, such as education, healthcare, environmental protection, poverty alleviation, and more. The regulatory framework ensures that these companies are focused on their charitable objectives and contribute to the betterment of society.
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We share a checklist and collect through our secure portal.
Our team files all applications with government authorities.
Certificates and audit-ready documentation delivered on time.
Practical answers curated by our CA and CS desks for SECTION 8 COMPANY.
It is a company formed under Section 8 of the Companies Act, 2013, with the objective of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, environment or other such objects, and which applies its profits, if any, solely to those objectiv
Individuals or
organisations that aim to establish a non-profit entity (for social, charitable
or public benefit purposes) and prefer a corporate structure rather than a
trust or society should consider this form.
It is governed under the Companies Act, with a formal corporate structure, limited liability, separate legal entity, and stricter compliance—all of which tend to give greater credibility compared to unregistered associations or some other forms.
Benefits include legal recognition, ease in entering contracts, owning property, raising grants/donations, greater donor confidence, eligibility for tax benefits, and a structured governance framework.
A Section 8 Company must have at least two members and at least two directors (in case of a private form) or as required under the Act. Also, at least one director must ordinarily be a resident of India.
The MoA must set out the
company’s objects (aligned with charitable/social purposes), and the AoA must
govern management, membership rights, governance, and ensure profits are applied
only to the objectives and no dividends are paid to members.
No fixed minimum share capital is mandated for a Section 8 Company—it can be incorporated with flexible capital because its objective is not profit distribution to members.
Yes—any profit or income of the company must be used solely for promoting the objects of the company; it cannot pay dividends to members or engage in business activities substantially outside those objects.
The steps typically include:
1 obtaining Director Identification Numbers (DINs) and Digital Signature Certificates (DSCs) for proposed directors;
2 reserving a name for the company
After incorporation, the company must maintain a registered office, file annual financial statements and annual returns, conduct governance meetings, ensure its activities align with objects, and apply its income only for these objects.
Yes—though incorporation itself does not guarantee all tax benefits, the company may apply for registration under provisions such as Section 12A/12AB and Section 80G of the Income Tax Act to get exemptions and enable donors to claim deductions.
The Central Government can revoke the license granted under Section 8, the company may be wound up, or the company may face penalties or lose tax benefits due to non-compliance of provisions under the Act.
Benefits include enhanced credibility, access to larger funding sources, structured governance, limited liability for members/directors, separate legal identity, tax advantages if properly registered, and transparency for stakeholders.
Challenges include rigorous
compliance requirements, inability to distribute profits to members, potential
high operational overhead, stricter regulation versus informal entities, and if
objectives or use of funds deviate, risk of cancellation of license or legal
action.
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