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Section 8 Company

Section 8 company is a special entity registered with a sole objective of charitable purpose. Unlike a trust, this is a corporate business structure that ensures the limited liability and a separate existence.
Company Details
Act No specified Act
Registration Requirement No
Number of members Only 1
Separate Legal Entity No
Liability Protection Unlimited
Statutory Audit Not mandatory
Ownership Transferability No
Uninterrupted Existence No
Foreign Participation Not Allowed
Tax Rates Low
Statutory Compliances Less

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Tags: section, company, starting, business, india

What is Section 8 company?

Section 8 company means a company registered for Social causes such as the promotion of arts, commerce, science, education, sports, protection of the environment, religion, charity, etc.

By promoting it as a not-for-profit organization, the Act does not bar the company from profit creation but rather prohibits distributing profit among members. This says that all the income or profit from any activity of the company must be utilized towards the charitable purpose for which it is registered.

The company is registered under Section 8 of the Companies Act, 2013, which provides it special status due to its objects. Compared to other types of companies, Section 8 company enjoys various exemptions and relaxations.

Benefits of incorporation of Section 8 company

Tax Exemptions

With its registration under Section 8 of Companies Act, it obtains a special status – distinct from other entities. Not only the company enjoys tax exemptions, but also the donors can claim an exemption for the donation made (under Income Tax). Apart from tax exemption, the company is also exempted from the applicability of many compliance-related provisions.

Separate legal identity

Being registered as a company, it obtains a separate identity apart from its members. Therefore, it can own and hold the assets and liabilities in its own name irrespective of the connection with the members. The change in members or the directors neither affects its existence or the assets & liabilities or rights & obligations.

Limited Liability

A company registered under Section 8 ensures limited liability to its members. The liability of the members is limited only to the extent of the capital subscribed and unpaid. The losses and obligations do not create a charge over the personal properties of members or directors. This helps the promoters to freely run the non-profit organisations.

No corporate title

Although the company enjoys the benefit of the corporate entity, it is not labelled as the corporate entity. The company does not need to add the suffix “Private Limited” or “Limited” after its name. This exemption is provided so that third parties offer their attention to the company’s purpose and not its status assuming it is profit making organisation.

No Minimum Capital Required

There is no prescribed limit over section 8 companies for the minimum capital requirement unlike other entities such as public or private limited, but the capital structure can be altered at any stage as required for the growth of the company.

No Stamp Duty Payable

A section 8 Company is exempted for the payment of stamp duty applicable for registration as applicable in the case of other structures such as private limited or a public limited company.

SERVICES COVERED

DIN for 2 Directors

TAN/PAN

Incorporation Certificate

MOA + AOA

Documents required for formation of a Section 8 Company

PAN Card

PAN Card of shareholders and Directors.

Foreign nationals must provide a valid passport.

Photograph

Latest Passport size photograph of Shareholders and Directors

Identity Proof

Voter ID/ Passport/ Driving License of Shareholders and Directors

Address Proof

Telephone Bill /Electricity Bill/ Latest Bank Account Statement of Shareholders and Directors

Business Address Proof

Electricity Bill/ Telephone Bill of the registered office address in India

NOC from owner

No Objection Certificate to be obtained from the owner(s) of registered office

Rent Agreement

Rent Agreement of the registered office should be provided, if any

Statement of Income & Expenditure

Estimated Statement of Income & Expenditure for next three years

How to choose a name?

Unique Name

Mainly it builds the company brand and preferably be a coined word

Business Object

Second part of name should suggest the business activity of the company

Suffix

Its name must include suffix like Foundation, Forum, Federation, Chambers, Association, Council, etc.

Constitution Type

The name does not require to add any suffix like “Private Limited” or “Limited”

Process Flow

Register a company in 3 easy steps

1. Answer Quick Questions

  • Fill in our questionnaires that take less than 10 minutes
  • Provide basic details & documents required for registration
  • Make payment through secured payment gateways

2. Experts are Here to Help

  • Assigned Relationship Manager
  • Procurement of Digital Signatures (DSC)
  • Application for Name Reservation
  • Documents drafting including MOA and AOA
  • Application to grant license u/s 8
  • Certificate of Incorporation

3. Your Company is Registered

  • All it takes is 10-11 working days*

Section 8 company registration procedure

Day 1

  • Application for Digital Signature Certificate

Day 2 - 4

  • Checking Name availability
  • Application for Name Reservation
  • Reservation of Name

Day 5 - 6

  • Drafting of MoA, AoA & other required documents
  • Payment of Stamp Duty
  • Notarization of required documents

Day 7 - 8

  • Application to grant a license in form INC-12
  • Government processing time for approval
  • License under section 8 in form INC-16

Day 9

  • Filing application for company registration
  • Application for PAN and TAN of company

Day 10 - 11

  • Government processing time
  • Certificate of Incorporation

Section 8 Company Registration