1. What is a Section 8 Company?
A Section 8 Company is a non-profit organization (NPO) registered under Section 8 of the Companies Act, 2013. It is formed to promote charitable objectives such as:
- Education
- Art, Culture, and Literature
- Social welfare
- Science and research
- Environmental protection
- Sports and religion
- Any other object of public welfare
It prohibits distribution of profit to members, and reinvests profits back into its charitable objectives.
📘 Legal Reference: Section 8, Companies Act, 2013
2. Members / Shareholders
- Minimum:
- 2 for Private Limited form
- 7 for Public Limited form
- Maximum:
- 200 in Private form
- Unlimited in Public form
- No individual can receive dividends or profits
3. Capital Requirements
- No minimum capital requirement
- Authorized and paid-up capital as per company’s needs
- Can receive:
- Grants & donations (domestic & foreign with FCRA)
- CSR funds
- Membership fees
- Project funding from government or international bodies
💡 Note: Section 8 Companies are not governed by capital but by license and objects.
4. Directors and Governance
- Minimum Directors:
- 2 for Private Form
- 3 for Public Form
- Maximum: 15 (can increase via special resolution)
- At least 1 Indian resident director
- Must obtain:
- DIN (Director Identification Number)
- DSC (Digital Signature Certificate)
📘 Legal Reference: Section 149, Companies Act, 2013
5. Registration Process & Cost
| Component | Description |
| Name Approval | Includes “Foundation”, “Society”, “Federation”, etc. (Not “Pvt Ltd”) |
| License | From Regional Director (RD), MCA |
| Incorporation | SPICe+ form with MOA, AOA, declarations |
| PAN, TAN | Issued with registration |
| Processing Time | 20–30 working days |
| Cost (approx.) | ₹15,000 – ₹20,000 ( varies as per professionals) |
6. Post-Incorporation Compliance
- Open company bank account
- File INC-20A (Commencement of Business) within 180 days
- Conduct first Board Meeting within 30 days
- Issue share certificates (if applicable)
- Maintain statutory registers and books
- Appoint auditor within 30 days (Form ADT-1)
- Hold annual AGM
- Maintain minutes of board/AGM meetings
- File annual ROC forms (MGT-7, AOC-4)
7. Benefits of Section 8 Company
✅ Legal & Structural
- Separate legal entity with limited liability
- Recognition and credibility among donors, funders, and govt.
- Can sue and be sued
- Perpetual succession
💸 Financial & Tax
- Eligible for Section 12A & 80G exemptions under Income Tax Act
- Can receive CSR contributions
- Eligible for FCRA registration for foreign donations
- Can raise capital via donations, grants, crowdfunding
- Income tax @ 22% (if applicable); otherwise exemptions via 12AA/80G
🌐 Operational
- Easier to open bank accounts, bid for government projects
- Can partner with other NGOs, trusts, companies
- Increased public trust and transparency
8. Documents Required for Registration
- PAN & Aadhaar of directors/members
- Address proof of office (electricity bill/rent agreement/NOC)
- Passport-size photos
- Proposed MOA & AOA
- Project Report (describing charitable activity plan)
- Declaration of non-profit objective (INC-14 & INC-15)
- Digital Signatures (DSC)
- Consent to act as director (DIR-2)
9. Annual Compliance Requirements
| Compliance | Form | Frequency |
| Financial Statement Filing | AOC-4 | Annually |
| Annual Return | MGT-7 | Annually |
| Auditor Appointment | ADT-1 | First year |
| Director KYC | DIR-3 KYC | Annually |
| Income Tax Return | ITR-7 | Annually |
| Board Meetings | Minutes, Agenda, Notices | 4/year |
| AGM | Annual General Meeting | 1/year |
| Renewal of 12A/80G/FCRA | As per validity |
10. Taxation & Exemptions
- Tax at normal corporate rate (22%) unless 12A exemption obtained
- Section 12AA/12AB: Exemption from tax on surplus income
- Section 80G: Donors get deduction
- FCRA Registration: Mandatory to receive foreign funds (after 3 years or by prior permission)
- Audit is mandatory — irrespective of turnover
11. Restrictions on Section 8 Companies
- Cannot declare dividends or distribute profits
- Cannot use funds for personal or unrelated business activity
- Change in objectives requires approval of Regional Director (RD)
- On dissolution, assets must be transferred to another Section 8 company or charitable body
12. Ideal For
- NGOs and charitable institutions
- Education or healthcare promoting bodies
- Environmental & cultural organizations
- Social entrepreneurs
- Foundations receiving CSR or foreign funds
- Impact-driven projects with structured operations
⚠️ Disclaimer
The above information is provided for general awareness and informational purposes only. While we strive to keep the content accurate and up to date, we do not guarantee the completeness, accuracy, or reliability of any information provided herein. The content should not be construed as legal, tax, or professional advice. We recommend consulting with our customer service team for the most recent and applicable guidance. We shall not be held responsible for any loss or liability arising from the use of this information.
