Section 8 Company
A Section 8 Company is a non-profit organization established under the Companies Act, 2013. It is formed to promote commerce, art, science, social welfare, charity, or environmental protection. A key feature is that any profits must be used to promote its objectives, and no dividends can be paid to members. This structure is often considered the most credible form for an NPO.
Benefits of Section 8 Company Registration:
- Distinct Legal Identity: It is a separate legal entity with perpetual succession.
- High Credibility: Strict regulations under the Companies Act enhance its transparency.
- Tax Concessions: Eligible to apply for 12A and 80G registrations for tax benefits.
- No Minimum Capital Requirement: Funds can be raised through donations and subscriptions.
- Name Exemption: Not required to use "Limited" or "Private Limited" in its name.
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What is a Section 8 Company?
It is a company registered under the Companies Act, 2013, for promoting charitable objects like arts, science, commerce, education, sports, etc. It is equivalent to a Trust or Society.
What happens to the profits?
Any profit earned by a Section 8 Company must be used to promote its charitable objects. Profits cannot be distributed as dividends to its members.
Does it have 'Ltd' or 'Pvt Ltd' in its name?
No. The government grants a license that allows the company to operate without using ‘Limited’ or ‘Private Limited’ in its name.
What are the benefits over a Trust or Society?
A Section 8 Company is a corporate entity, which gives it higher credibility, better legal standing, and makes it easier to manage operations across India.