The primary goal of the Section 8 Company is to serve charitable purposes. These companies fall under the Companies Act, 2013. These companies aim to incentivize commerce, art, sports, science, welfare, research, social, religion, environmental protection, etc. The prevailing Act doesn’t allow these companies to allocate the profit to their members. Instead, the earned profit is utilized to promote the company’s objective.

Pre-requisites for Incorporating a Private Company

The name with which the promoters are desirous of running their business form should be unique and should not resemble with any ongoing business form as per Incorporation Rules and Companies Act, 2013.

A person above the age of 18 is capable to incorporate a Section 8 company and be the Directors and Subscriber of the company.

A minimum of two directors is required if the Section 8 company is to be incorporated as a private limited company, and a minimum of three directors in case of incorporation as a public limited company.

There is no such limit of Number of members in Section 8 Company but if it is incorporated as private limited than the restriction is upto 200 members.

There is no minimum and maximum amount stated for the funds in the Section 8 company in Companies Act, 2013. The company can be incorporate either as limited by shares or limited by guarantee.

Section 8 companies are incorporated with non-profit objectives. The MOA must mention the non-profit objective or purpose for which it is established. Any income earned by the Section 8 company is utilised for the furtherance of its main objectives, i.e. charitable purposes or reinvested in the company. The profits will not be distributed among its members.

The place through which the activities of the business are to be carried on in legal terms is said to be the registered office of the company.The registered office should be capable of receiving and acknowledging all communications and notices as may be addressed to it.

Process of Incorporation

• Availing the name of the Section 8 Company.
• Availing DSC of any 2 Director.
• Documentation and procedural work
• Application for License of Section 8 Company by filling Form INC-12.
• Filing SPICE+ form with Ministry of Corporate Affairs
• Getting Certificate of Incorporation with PAN, TAN, ESIC , PF and DIN.

Benefits of Incorporating a Section 8 Company

• Section 8 company do not have to pay stamp duty on the AOA and MOA of the private or public limited company which other companies surely pays.
• Section 8 companies are not compelled to affix the term like Limited or Private Limited in their name. These entities are registered with limited liability.
• It has a separate legal entity just like companies.
• Those donating to a Section 8 Company are eligible for tax exemptions u/s 12A and 80G of the Income Tax Act.
• Section 8 company has a distinct legal entity which means the company’s existence is different from its members.