Registering a Section 8 Company in India.

Registering a Section 8 Company in India.

A company registered under Section 8 of Companies Act, 2013 is similar to the Section 25 Company under the old Companies Act, 1956 but with more objectives. Section 8 of Companies Act 2013 refers to a company as a company having non-profit and charitable objectives. A company under Section 8 devotes all its incomes and profits towards the advancement of their objectives. The main motive of the Company is to uplift the objectives like commerce,art, science,education, research, social welfare, religion, charity, environment protection and other similar objectives.

Features for registration:

The registration process of Section 8 Company is similar to that of a Private Limited Company therefore to start a Section 8 Company, a minimum of  2 directors are required.

Section 8 Company of the Companies Act, 2013 has some special features which distinguish it from other kinds of companies:

  • Non-Profitable objectives: Section 8 Companies work on a charitable basis and do not work to make a profit. The main focus of the company is to cover objectives like art, science, research, sports, religion and so on.                                  
  • Minimum paid-up capital: Section 8 companies do not require minimum paid up share to start the company like all other companies.                       
  • Limited Liability: The members under the Section 8 Company can only have limited liabilities.                             
  • Government License: The Section 8 Company requires a Central Government license to function although the Government can revoke the license in case of  any problems.                       
  • Privileges: As the company deals with charitable objectives, it has many benefits and exemptions attached to it.          
  • Firms as members: Another advantage of a Section 8 Company is that it also includes firms to be members of the company apart from the individuals and associations of persons.                         
  • Formation of the Company under Section 8:                      

A Section 8 Company can be formed by a person or an association of persons making an application including all the forms to form a company to the Registrar of Companies. After the filing of the application, the Central Government (if satisfied) will accept the application and grant the license according to any terms and conditions of the same. The company will be registered after all the requisite payments have been made by the applicant. Once the company is formed, it is not required to include the words ‘’Limited or ‘’Private Limited’’ in their names as all other companies have to.

Cancellation of License:

The Company’s license can be revoked on the following grounds:

  • In case of contravention of Section 8
  • If the terms of the license are violated.
  • When its own objectives and public policy are violated.
  • In case of any fraudulent conduct.

Before passing any such orders, the Government is required to hear the company.

Winding Up:

A Section 8 Company can be wound up voluntarily or under the order of the Central Government.In case any assets remain after satisfaction of debts and liabilities during the time of winding up then the assets can be transferred to a similar company by the order of the National Company Law Tribunal. It can also order the company to sell the assets and the money for this sale to be credited to the Insolvency and Bankruptcy Fund.

Privileges and Exemptions under Section 8 Company:

Section 8 companies provide various advantages to the people who want to conduct charitable activities. Following are the privileges and exemptions a person may get from a Section 8 Company:

  1. Section 8 Companies provide various tax exemptions, specially to the donors contributing to the charitable activities as they have the right to claim the Tax exemption against the donation they made to a Section 8 Company.
  2. It provides exemption on the payment of the stamp duty at the time of registration of the company under Section 8.
  3. To start a Section 8 Company no minimum paid up capital is required but the capital structure can be altered in future according to the growth of the company.
  4. It has its own separate identity from its members and also has a perpetual existence.
  5. Section 8 Company is known for its credibility as compared to the NGOs  as it is licensed under the supervision of the Central Government. The company has a strict regulation therefore no change can be made in MOA and AOA at any stage or situation of the Company.

As a Section 8 Company is known for its strict regulation and provides greater satisfaction to the people involved in charitable activities, it is most reliable in comparison to the other legal structures. Team Delfyle wishes you the very best of luck for your amazing journey ahead. In case of any further queries, feel free to get in touch with us at info@delfyle.com for a chat, absolutely free of cost!

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