The Ultimate Guide to SECTION 8 COMPANIES

5 min readMar 16, 2024

The Ultimate Guide to SECTION 8 COMPANIES

Section 8 companies are non-profit organizations officially registered under the Companies Act, enjoying advantages superior to those of conventional charitable institutions. These entities are authorized to utilize their profits to further their established objectives, with a prohibition on distributing dividends.

This section streamlines the management, operation, and registration processes for companies, offering a more flexible structure. The Companies Act of 2013 introduced Section 8 Companies to enable entities with charitable goals to register without the constraints of being limited or private limited.

What is Section 8 company?

Section 8 companies, now defined under the Companies Act, have the purpose of advancing fields such as science, commerce, art, education, research, sports, social welfare, charity, environmental protection, or similar objectives.

Previously categorized under Section 25 with nearly identical provisions, the updated act has expanded the range of objectives for Section 8 companies. Notable examples include the Confederation of Indian Industries (CII) and the Federation of Indian Chambers of Commerce.

Starting April 1, 2021, all NGOs must complete the CSR-1 form on the MCA portal to register with the central government. This mandatory form is essential for social organizations seeking CSR funds and managing CSR implementation, contributing to the effective monitoring of CSR spending in the country.

What are the various benefits of a Section 8 company?

Numerous advantages incentivize the formation of Section 8 companies over NGOs and associations engaged in charitable activities, as outlined below:

No Minimum Capital Requirements: Section 8 companies do not necessitate a minimum paid-up capital for registration.
Enhanced Credibility: These companies, holding licenses issued by the Registrar of Companies (ROC), gain credibility through their activities. They typically enjoy greater credibility compared to NGOs, trusts, and societies.
Tax Benefits: Section 8 companies are entitled to various tax benefits.
Eligibility for Grants and Donations: These entities qualify for multiple grants from the Government of India and can receive donations from the general public.
Limited Liability for Members: Members are not personally liable for the company’s debts, enjoying limited liability.
Separate Legal Entity: Section 8 companies and their directors are distinct entities. Even if a director becomes incapacitated, the company maintains its existence as a separate legal entity with perpetual existence.
Reduced Compliance: These companies are exempt from several procedural compliances, with lower stamp duties and other fees.

Various documents required by the Section 8 Company

To get themselves registered as per the Companies Act 2013, companies need to submit identity and address proof on the Ministry of Corporate Affairs portal.

Address and Identity proof of directors and shareholders

Copy of Aadhar Card
Copy of latest bank statement and utility bill
Copy of Driving license and Voter ID
Passport-size photographs of the directors
Copy of Passport or PAN Card

Address Proof of Registered Office

No objection certificate (NOC) from the owner of the property.
Copy of electricity/water/gas bill(not older than two months)
Rent agreement in case of rented office

Section 8 company registration process

Application for Digital Signature Certificate (DSC) — Both directors and subscribers of the Section 8 Company are required to apply for a Digital Signature Certificate. This process, conducted online, can be completed within 24 hours.

2. Name Availability Application — When applying for the name, the industrial activity code and object clause of the company must be specified. This is done through filing the SPICe+ form.

3. Application for Section 8 License — To obtain the license for a Section 8 company from the Registrar of Companies, the INC-12 form must be completed. Upon approval, the ROC assigns a 6-digit Section 8 license number.

INC-32 Form Submission — Following name approval, detailed information is provided for registration in the SPICe+ form. This electronic incorporation process facilitates the registration of the company.

The required details are outlined below –

1. Declaration by subscriber and directors

2. Application for Director Identification Number (DIN)

3. Detail of the company

4. Application for PAN and TAN

5. Detail of members and subscribers

6. Declaration & Certification by professional

Filling of e-MoA and e-AoA — SPICe e-MoA and e-AoA also need to be filled at the time of company registration.

COI Issuance — The concerned department will issue PAN, TAN, and Certificate of Incorporation. By using this document a bank account will be opened.