Section 8 Company is named Section 8 of the Companies Act, 2013, which pertains to a established ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company or Section 25 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.
A Section 8 Company is similar to a Trust or Society; expect, a
section 8 Company is registered under the Central Government’s Ministry
of Corporate Affairs. Trusts and Societies are registered under State
Government regulations. A section 8 company has various advantages when
compared to Trust or Society like improved recognition and better legal
standing. Section 8 company also has higher credibility amongst donors,
Government departments and other stakeholders.
Documents Required
- Digital Signature Certificate (if you already have it)
- Director Identification Number (if you already have it)
- Memorandum of Association
- Articles of Association
- ID proof for members: (Aadhar Card, Passport, Voter ID)
- Passport size Photographs
- Director’s details (if Members are other Companies/LLPs)
- Address Proof
Section 8 Company – Companies with Charitable Objects
In India, a non-profit organization can be registered as Trust by executing a Trust deed or as a Society under the Registrar of Societies, or as a private limited non-profit company under Section 8 Company under the Companies Act, 2013. A Section 8 Company is the same as the popular Section 25 company under the old Companies Act, 1956, which was one of the most popular forms of Non- Profit Organizations in India. But, as per the new Companies Act 2013, Section 25 (as per the old act) has now become Section 8.
As per Section 8(1a, 1b, 1c) of the new Companies Act, 2013, a Section 8 company can be established for “promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object”, provided it “intends to apply its profits, if any, or other income in promoting its objects” and “intends to prohibit the payment of any dividend to its members.”.
To register a section 8 company in India, the process is similar to the incorporation of other companies (except an additional license is required). The applicant looking to start a section 8 company is required to file Form INC-1 for name availability. Once the name is approved, there is a further requirement of obtaining a license for a Section 8 Company, for which Form RD-1 is to be filed in order to obtain a license for such company. After obtaining the license number, an applicant can proceed further to incorporate a company by filing e forms INC-7, INC-22 and DIR-12 or e-forms INC-7 and DIR-12 as the case may be.
The text of the Section 8 provision in the 2013 Companies Act reads:
COMPANIES ACT, 2013, Section 8 Formation of companies with charitable objects, etc.:
- has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object
- intends to apply its profits, if any, or other income in promoting its objects; and
- intends to prohibit the payment of any dividend to its members, the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.
- the company registered under this section shall enjoy all the
privileges and be subject to all the obligations of limited companies.
Annual Compliance For Section 8 Company
- A Section 8 Company is an NGO & one of the forms of companies mentioned in The Companies Act 2013. Like every company registered under this act, Section 8 Company is required to file Compliances as prescribed in the Act.
- A Section 8 Company is registered for promoting sports, art,
science, religion, charitable activities, etc. These companies are in
obligation to file annual and event-based (one-time) compliances with
The Ministry of Corporate Affairs.
List of Annual Compliance for Section 8 Company
- Annual compliances are the compliances that are obligatory to be filed at regular intervals. These are periodical in nature and constitute a liability for the company to file.
- The list of annual compliance for a Section 8 Company is as follows.
Appointment of Auditor
Section 8 Company needs to appoint an auditor to take care of books of
accounts for the company. Appointment of Auditor is must for every
Section 8 Company.
- Maintenance of Books of Accounts
Every Section 8 Company is expected to maintain its books of accounts periodically. This includes all the transactions related to income, expense, and donations. - Maintenance of Statutory Registers
It is mandatory for the section company to maintain statutory registers. This will provide an overview of the working structure of the company. - Convene Statutory Meetings
Section 8 Companies are under obligation to convene a meeting of the board of directors and meeting of shareholders. - Preparation of Financial Statements
Section 8 Company needs to prepare its financial statements. Financial statements are a record of financial transaction that occurred in the company. - Income Tax Returns
Every Section 8 Company is under obligation to file income tax returns by 30th September of the following financial year. - Financial Statement Returns Filing (AOC-4)
It is mandatory for a Section 8 Company to file AOC-4 along with supporting documents. This return comprises details of the financial statements of the company. This is filed within 30 days of the date of the annual general meeting. - Annual Return Filing (MGT-7 -ROC Annual Returns)
The Section 8 Company will file its annual return with the Ministry of Corporate Affairs through form MGT -7.