Section 8 Company
What is Section 8 Company?
A company is referred to as Section 8 Company when it registered as a Non-Profit Organization (NPO) i.e. when it has motive of promoting arts, commerce, education, charity, protection of environment, sports, science, research, social welfare, religion and intends to use its profits (if any) or other income for promoting these objectives.
Eligibility to Apply for Section 8 Company
An individual or an association of individuals are eligible to be registered as Section 8 Company if it holds below-mentioned intentions or objectives. The objectives have to be confirmed to the satisfaction of the Central Government.
- When the company intends to promote science, commerce, education, art, sports, research, religion, charity, social welfare, protection of the environment or alike other objectives.
- When the company holds an intention to invest all the profits (if any) or any other income generated after incorporation in the promotion of such objects only.
- When the company does not intend to pay any dividend to its members.
Advantages Of Section 8 Company
- Members have limited liability.
- No minimum capital requirements.
- They get several tax exemptions.
- Stamp duties and high fees are not payable for registration.
- They have perpetual existence and separate legal status.
- Exemptions from carrying out several procedural compliances.
- More credibility than compared to NGOs, societies, and trusts because they are recognized by the Central Government’s license.
Disadvantage Of Section 8 Company
- Members of the company cannot get any dividend.
- Officers and directors do not get benefits and allowances.
- Can only use the profits for furthering charitable aims and objectives.
- Amendment of memorandum and articles requires Central Government’s permission.
- The license is revocable on several grounds.
- Director Identification Number (DIN).
- Digital Signature Certificate.
- Memorandum of Association.
- Articles of Association.
- Passport size Photographs.
- Members Id Proof such as Aadhar Card, Bank Statement, Passport/ Voter ID/ Driving License.
- Details of Directors.
- Address Proof of Company – Electricity Bill/ Rent Agreement / NOC.
- INC 14 & 15.