Section 8 Company Registration in India – Complete Guide

1. What is a Section 8 Company?

A Section 8 Company is a non-profit company registered under Section 8 of the Companies Act, 2013.
It is formed with the objective of promoting social welfare, charity, education, research, healthcare, sports, art, culture, or any other charitable purpose.

Key Points:

• Operates not for profit, i.e., profits are reinvested in the company’s objectives.

• Can be set up by minimum 2 members (for private) or 3 members (for public).

• Can have unlimited directors, but minimum 2 (private) or 3 (public).

• No shareholders in the profit-making sense, as dividends are not distributed.

• Requires Central Government approval via the Registrar of Companies (ROC).

2. Characteristics of Section 8 Company

3. Advantages of Section 8 Company

1. Tax Benefits – Eligible for income tax exemptions under Section 12AA and 80G.

2. Limited Liability – Members’ liability limited to their capital contribution.

3. Separate Legal Entity – Can enter into contracts, own property, sue or be sued.

4. Credibility – Recognition as a legal entity increases trust with donors, NGOs, and government bodies.

5. Perpetual Succession – Continues even if members or directors change.

6. Funding Opportunities – Can receive grants, donations, CSR funds, and government support.

7. Low Compliance Burden Compared to PLC – Easier compliance than Public Limited Companies.

4. Disadvantages of Section 8 Company

1. No Dividend Distribution – Cannot pay profits to members.

2. Central Government Approval Required – Initial license process may take time.

3. Limited Commercial Activities – Activities must be aligned with the stated charitable objectives.

4. Strict Compliance – Regular annual filings, audits, and adherence to charitable objectives.

5. Cannot Engage in Profit-Making Ventures – Except as a means to support charitable goals.

5. Eligibility Criteria

• Must have 2 or more members (Private) or 3 or more members (Public).

• Directors must be individuals (residents).

• Company must have a clear charitable objective (social, education, research, healthcare, arts, sports, environment).

• Cannot be formed for profit generation for members.

6. Steps for Section 8 Company Registration

Step 1: Obtain Digital Signature Certificate (DSC)

• Required for all directors and members for online filings.

Step 2: Apply for Director Identification Number (DIN)

• Required for all proposed directors.

Step 3: Name Approval (RUN Service)

• Reserve a unique name with MCA.

• Name must reflect the charitable purpose.

Step 4: Draft MOA & AOA

• MOA (Memorandum of Association): Outlines charitable objectives.

• AOA (Articles of Association): Rules for governance and internal management.

Step 5: Apply for Section 8 License

• Submit Form INC-12 to the MCA along with:

  • Declaration by directors

  • Copies of MOA and AOA

  • Affidavit and consent letters from directors

  • Proof of office address

• License is approved by Central Government/ROC if objectives are valid.

Step 6: Incorporation Filing

• After license approval, file SPICe+ Form (INC-32) for incorporation.

• Receive Certificate of Incorporation (COI).

Step 7: PAN & TAN Application

• Required for taxation and bank account opening.

Step 8: Open Bank Account

• Use COI and PAN to open the official bank account.

7. Compliance Requirements for Section 8 Company

8. Tax Benefits for Section 8 Company

• Eligible for Income Tax exemptions under Sections 12AA, 80G, and 35AC for approved charitable activities.

• Donations to Section 8 Company eligible for tax deduction for donors under Section 80G.

• Must maintain proper books and audit reports to claim exemptions.

9. Documents Required for Registration

10. Section 8 Company vs Trust or Society

11. Examples of Section 8 Companies

• Teach For India – Education non-profit.

• HelpAge India – Social welfare organization.

• Goonj – Rural development & social initiatives.

• Pratham – Education-focused NGO.

Note: Section 8 Companies are often large-scale NGOs or social enterprises.

12. Costs of Section 8 Company Registration

13. Frequently Asked Questions (FAQs)

Q1: Can Section 8 Company distribute profits to members?

• No, profits must be reinvested to promote the company’s objectives.

Q2: Can a foreign national become a director?

• Yes, with DIN approval, but they must comply with resident director requirements.

Q3: Is Section 8 Company allowed to do business?

• Only if business activity supports charitable objectives.

Q4: Can Section 8 Company apply for government grants?

• Yes, eligible for CSR funds, government schemes, and international grants.

Q5: Is auditing mandatory?

• Yes, audited financial statements are required annually.