Section 8 Company Registration
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- Section 8 Company registration offers benefits like legal recognition, tax exemptions, grant eligibility, enhanced credibility and ability to pursue charitable objectives with structured governance.
- We provide a seamless Section 8 Company registration process, handling all documentation and compliance requirements for quick and hassle-free approval.
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Section 8 Company Registration in India
A Section 8 Company is a non-profit organisation incorporated under the Companies Act, 2013 to promote charitable objectives such as education, social welfare, environment protection, research, and other public causes.
Unlike profit-oriented companies, a Section 8 Company is prohibited from distributing profits to its members. Any income generated must be reinvested to achieve its objectives.
Key Features of Section 8 Company
- Formed with a Non-Profit Objective: The primary aim of the companies incorporated under Section 8 of the Companies Act, 2013, is to promote charitable and social activities without the intention of earning profits.
- No "Limited" or "Private Limited" Suffix: Unlike private or public companies, Section 8 companies do not use "Ltd." or "Pvt. Ltd." in their name.
- Limited Liability: The members of the section 8 companies have liabilities limited to their shares in the company, which means that their personal assets are protected from the debts and liability of the company.
- No Minimum Capital Requirement: No minimum capital is required to incorporate a Section 8 Company in India.
- Separate Legal Entity: The company has its own legal identity in the eyes of the law and stakeholders, which allows it to own property in its name and incur debts independently of its members.
Benefits of Forming a Section 8 Company
Incorporating companies under Section 8 of the Companies Act, 2013 has several benefits, including:
- Perpetual Succession: Companies incorporated under Section 8 continue to exist even if the members and the leadership of the company change.
- Limited Liability: Directors and members of a Section 8 company enjoy limited liability, which means that their personal assets are protected from the company’s debts and liabilities.
- Tax Benefits: Section 8 companies can avail of exemptions on income generated from their charitable activities under Section 12A of the Income Tax Act of 1961. Furthermore, once the company is recognized under Section 80G of the Income Tax Act of 1961, any donations received can offer donors significant tax relief.
- No Stamp Duty on Incorporation Documents: It is a general rule that during the formation of a company, stamp duty is levied on the documents. However, Section 8 companies are granted an exemption from paying stamp duty on these documents in many jurisdictions.
- Efficient Management: The corporate structure of a section 8 company allows for a professional board of directors, which in the long run leads to efficient decision-making and management.
- Enhanced Credibility: Companies incorporated under Section 8 of the Companies Act, 2013, must comply with various rigorous compliances to maintain their legal standing. These include mandatory annual audits, regular board meetings, and periodic filings with the Registrar of Companies (ROC). Such strict operational rules make stakeholders and donors see the organization as more reliable and transparent compared to unregistered entities like certain trusts or societies.
Eligibility Criteria for Section 8 Company Registration
- No minimum share capital: Under Section 8 of the Companies Act, 2013, there is no minimum share capital requirement for incorporating a company.
- Charitable purpose: The company must be established with an object to promote non-profit activities like commerce, art, science, sports, education, research, social welfare, religion, charity, environmental protection, or similar objectives
- No profit sharing: Members of Companies under Section 8 of the Companies Act, 2013, are not allowed to share profit among themselves. If there is any surplus income, it shall be reinvested to fulfil the company's objectives.
- A minimum of two directors is required: A Section 8 company needs at least two directors. The directors and the shareholders can be the same individuals.
- Indian resident: At least one of the company's directors must be a resident of India.
- Clear organizational plan: To establish a company under Section 8 of the Companies Act, 2013, the founders need a well-defined vision and a detailed plan that clearly outlines how the organization will achieve its non-profit objectives.
- Name requirements: The chosen name for the Section 8 company should reflect its non-profit nature, such as “Foundation,” “Association,” or “Society.”
Documents Required for Section 8 Company Registration
1. For Directors:
- Aadhar Card, PAN Card, or passport (for foreign nationals)
- Recent Passport-size Photographs
- Digital Signature Certificate (DSC)
- Director Identification Number (DIN)
2. For the Shareholders:
- Aadhar Card, PAN Card, or passport (for foreign nationals)
- Recent Passport-size Photographs
- A declaration using the INC-15 form
3. For the Company:
- Address of the registered office
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Form INC-12 (Application for Section 8 License)
- Name Reservation Certificate
A declaration by a practising chartered accountant or company secretary confirms that the MoA and AoA of the company comply with the Companies Act of 2013.
Forms Required for Section 8 Company Registration/Incorporation
- SPICe+ (INC-32): It is a mandatory form for incorporating a Section 8 Company, which includes name approval, DIN allotment, and company registration.
- INC-12: The application form to obtain a license from the government to operate as a Section 8 Company.
- INC-13: The prescribed Memorandum of Association (MoA) format.
- INC-14 & INC-15: These are declarations by professionals and subscribers confirming that the company's objectives comply with Section 8 regulations.
- DIR-2: It is a form where each proposed director is to provide their formal consent to act as a director of the company.
- AGILE-PRO (INC-35): This form is used to apply for GST registration, EPFO, and ESIC and to open a company bank account during incorporation.
Section 8 Company Registration Process in India
Obtain DSC
All proposed company directors must acquire DSCs to sign electronic documents. DSCs can be obtained from authorized Certifying Authorities (CAs) like eMudhra, Sify, or NSDL. The Controller approves the issuance of DSCs by these agencies of Certifying Authorities (CCA).
Apply for Director Identification Number (DIN)
All proposed company directors must acquire a Director Identification Number (DIN) to file the incorporation documents. You can apply for DIN online via the Ministry of Corporate Affairs (MCA) portal by submitting Form DIR-3.
Name Reservation
Once DSC and DIN are obtained, the next step is to choose a name for your company that reflects its charity purpose. You can add words like ‘Foundation’ or ‘Association’ at the end. File and submit the Form INC-1 at the MCA portal to reserve a name for the company. The name shall be reserved for 20 days.
SPICe Form (INC-32) Filing
Submitting a SPICe form, a proforma for online Section 8 business incorporation, is the next step after obtaining a DSC and Section 8 company licence. You need the following information to complete the form:
- Details of the Company
- Details of Members and Subscribers of MOA and AOA.
- Application for Director Identification Number (DIN)
- Application for PAN and TAN
- Declaration by Directors and subscribers
- Declaration and Certification by professional
Draft MoA and AoA
Once your company name is reserved, draft the Memorandum of Association (MoA) to outline your organization's charitable objectives and the Articles of Association (AoA) that define your governance structure.
File Incorporation Forms
- Submit Form INC-12 to apply for a license under Section 8
- Upon approval, file Form SPICe+ (INC-32) along with the MoA and AoA to incorporate the company.
Obtain Certificate of Incorporation
After verification, the Registrar of Companies (RoC) issues the Certificate of Incorporation, officially recognizing the entity as a Section 8 Company.
Apply for PAN and TAN
Once your company is incorporated, apply for the company's Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
Open a Bank Account
Use the Certificate of Incorporation, PAN, and other documents to open a bank account in the company's name.
Donations and Funding for Section 8 Company
1. Accepting Donations for Section 8 Company:
- Once the Section 8 Company is successfully registered, it can begin accepting donations. However, it has to comply with the regulatory guidelines to receive funds.
2. Legal Requirements for Accepting Donations:
- A Section 8 Company must have 12A registration from the Income Tax Department to qualify for tax exemptions.
3. 80G Certification:
- To enable donors to avail of tax deductions on their contributions, the company must obtain 80G certification. The company needs to register under FCRA to accept donations from foreign sources.
4. FCRA Registration for Foreign Donations:
- If the organization wishes to accept foreign donations, it is necessary to register under the Foreign Contribution Regulation Act (FCRA).
Restrictions and Limitations of Section 8 Company
- Cannot distribute profits to members
- Subject to strict regulatory compliance
- Conversion to other company types is restricted
- Assets must be transferred to another non-profit on dissolution
Penalty under Section 8 of Companies Act, 2013
- Fine ranging from ₹10 lakhs to ₹1 crore
- Directors may face imprisonment up to 3 years
- Additional penalties for non-compliance
Revocation of Section 8 License
The Central Government may revoke the license if:
- Company violates Section 8 provisions
- Activities are fraudulent or unlawful
- Company acts against public interest
Section 8 Company Compliance in India
A Section 8 Company is required to follow strict compliance requirements under the Companies Act, 2013 and the Income Tax Act, 1961. These compliances ensure that the organisation operates transparently, retains its legal status, and continues to enjoy tax benefits and funding eligibility.
Failure to comply with these requirements can result in penalties, loss of tax exemptions, or even revocation of the Section 8 license.
Annual ROC Filings
Filing of Financial Statements (Form AOC-4)
Every Section 8 Company must file its audited financial statements with the Registrar of Companies. This includes the Balance Sheet, Income & Expenditure Statement, Auditor's Report, and Board's Report, reflecting the financial position of the organisation.
Filing of Annual Return (Form MGT-7)
The annual return contains details such as the company's registered office, directors, governance structure, and other statutory information, and must be filed annually.
Filing Timeline
Form AOC-4 must be filed within 30 days of the Annual General Meeting, while Form MGT-7 must be filed within 60 days of the AGM.
Additional ROC Filings
Companies are also required to file Form ADT-1 for the appointment of auditors and DIR-3 KYC for updating director information annually.
Board Governance and Meeting Compliance
Board Meetings
A Section 8 Company must conduct at least two Board Meetings every year to review operations and take key decisions.
Annual General Meeting (AGM)
The AGM must be held within six months from the end of the financial year to present financial statements and discuss important matters.
Maintenance of Records
Minutes of meetings, attendance registers, and resolutions must be properly recorded and maintained to ensure transparency and regulatory compliance.
Accounting and Audit Compliance
Maintenance of Books of Accounts
The company must maintain proper accounting records, including cash books, ledgers, and supporting financial documents.
Preparation of Financial Statements
Annual financial statements such as the Balance Sheet and Income & Expenditure Statement must be prepared accurately.
Statutory Audit Requirement
A statutory audit is mandatory for Section 8 Companies, regardless of their size or turnover, to ensure financial transparency.
Income Tax Compliance (12A & 80G)
12A Registration
Section 8 Companies must obtain 12A registration to claim exemption from income tax on their surplus income.
80G Certification
80G certification allows donors to claim tax deductions on their contributions, making it easier for the company to attract funding.
Income Tax Return Filing
The company must file its Income Tax Return (ITR-7) annually and maintain proper records of donations and utilisation of funds.
CSR Compliance
CSR Registration and Reporting
If the company receives Corporate Social Responsibility (CSR) funds, it must be registered on the MCA CSR portal and comply with reporting requirements.
Utilisation of Funds
CSR funds must be utilised strictly for approved charitable objectives, and proper records must be maintained.
FCRA Compliance
FCRA Registration
To receive foreign donations, a Section 8 Company must obtain registration or prior approval under the Foreign Contribution Regulation Act (FCRA).
FCRA Bank Account
A separate designated bank account must be maintained for receiving foreign contributions.
Annual FCRA Filing (Form FC-4)
Companies must file annual returns disclosing the receipt and utilisation of foreign funds.
Director Compliance
DIR-3 KYC Filing
All directors must complete their KYC filing annually to keep their Director Identification Number (DIN) active.
Director Disclosures
Directors are required to submit disclosures regarding eligibility and disqualification and maintain updated records.
Statutory Registers and Records
Maintenance of Registers
The company must maintain statutory registers, including records of members, directors, loans, and contracts.
Financial and Compliance Records
Proper documentation of financial transactions and compliance activities must be maintained for audit and regulatory review.
Event-Based Compliance
Changes in Directors or Structure
Any change in directors must be reported by filing Form DIR-12 with the ROC.
Change in Registered Office
If the company changes its registered office address, Form INC-22 must be filed.
Other Structural Changes
Any structural or governance-related changes must be reported through appropriate ROC filings.
Consequences of Non-Compliance
Financial Penalties
Non-compliance may attract heavy penalties, which can extend up to ₹1 crore depending on the severity of the violation.
Director Disqualification
Directors may be disqualified for failing to comply with statutory requirements.
Revocation of Section 8 License
The Central Government may revoke the license if the company violates its objectives or regulatory provisions.
Loss of Tax Benefits
Failure to comply may result in cancellation of 12A and 80G registrations.
Strike-Off by Registrar of Companies
In severe cases, the company may be removed from the official records of the MCA.
Importance of Section 8 Company Compliance
Maintaining compliance ensures that the company remains legally valid, continues to receive funding, and operates transparently. It also strengthens credibility among donors, stakeholders, and regulatory authorities, enabling long-term sustainability.
Frequently asked questions
Donations, grants, and other non-equity capital sources are some ways you might raise money. There is a legal prohibition on this kind of firm raising money through stock shares.
A charitable corporation may be established under the Companies Act of 2013 as a Section 8 business. A limited guarantee (with or without share capital) or limited share capital may be used in this type of business.
No, in order to form a Section 8 Company, there is no minimum capital requirement. Any quantity of capital will be enough to register it as long as it is enough to achieve its goals.
It depends on your need. Both offer different benefits. Section 8 companies can be preferred for their structure, transparency and trustworthiness. While trusts are easier to set up and have lower compliance requirements.
Under Section 8 of the Companies Act, a minimum of two directors is required.
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