As per the Companies Act, Section 8 Company is a Non-Profit Organization (NPO), with a motive of promoting arts, charity, commerce, education, protection of the environment, sports, research, social welfare, science, religion and intends to use its revenues (if any) or other income for promoting these objectives.
The income of NPO can not be used for paying out dividends to the company's members and has to be for the promotion of charitable objectives. Such companies obtain an incorporation certificate from the central government and are liable to adhere to the rules specified by the government.
Failure to comply with the responsibilities may lead to the company's winding up on the government's orders. Besides, the government can take strict legal action against all the company members if the company's objectives prove to be bogus.