Section 8 Company

As per Section 8 of Companies Act 2013, A Non-profit Company or a Section 8 Company is a company which:

(a) has promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object as its objects
(b) intends to apply its profits, if any, or other income in the promotion of its objects and
(c) prohibits any payment of dividend to its members.

Restrictions

• Section 8 continues to provide for restriction on application of profits and permits the same only for the purpose for which the company is promoted,
• Prohibits declaration of dividend

Number Of Directors

• Private Company – Minimum 2 Directors
• Public Company – Minimum 3 Directors

Number Of Members
If the Section 8 Company aims to function as a private limited company, the number of members is capped at 200 by the Ministry of Corporate Affairs (MCA). However, there is no such limit for Section 8 entities with a business structure like a public limited company.

Capital requirement:
Section 8 Company may be incorporated as a company limited by shares or by Guarantee (with or without share capital).

INCORPORATION PROCESS

• Applying For Reservation Of The Selected Name In Spice Part-A
  • In the name approval application, maximum TWO names with business objectives can be submitted.
  • As per rule 8(7) of the Companies (Incorporation) Rules, 2014, for the Companies under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc.
  • The approved name gets reserved for 20 DAYS. (It can be extended for 40-60 days)
• Apply for the Digital Signatures Certificates of Subscribers and Directors (If subscribers not the first directors)
• Filing of incorporation application with the Central Registration Centre of MCA for incorporation of Private Limited Company. This application shall be filed in Eform SPICe Part-B along with the various attachments and linked E-forms i.e., E-MOA, E-AOA, INC-9 and Agile Pro. On receipt of the aforementioned documents and forms, the office of the MCA will scrutinise them and if they are found complete in all respects, the Registrar will register the Company and allot CIN, PAN, TAN ESI & PF. A Certificate of Incorporation will be issued by the Registrar of Companies

Benefits of a Section 8 Company in India

• No Need for Paying Stamp Duty
• No Minimum Capital Requirement
• Tax Exemption
• Section 8 Companies are exempted to suffix Limited/ Private Limited with the name of the company