Section 8 Company

A Section 8 Company is a not-for-profit company incorporated under Section 8 of the Companies Act, 2013 to promote objects such as commerce, art, science, sports, education, research, social welfare, religion, charity or protection of the environment. It must apply its profits and income solely towards promoting these objects and is prohibited from paying any dividend to its members. Because it operates for public benefit, it requires a licence from the Central Government (powers delegated to the Registrar of Companies) and can drop the suffix "Limited" or "Private Limited" from its name.

Legal basis and licence

The structure replaces the former Section 25 company of the Companies Act, 1956. It is incorporated through the SPICe+ (INC-32) form, with the Central Government licence issued in Form INC-16 (or INC-17 for an existing company converting under Section 8(5)). It may be registered as a private or public limited company, with or without share capital, and there is no minimum paid-up capital requirement.

Key features

• Profits are ploughed back into the objects; no distribution to members.
• At least two members and two directors for a private company; three directors for a public one.
• Enjoys the credibility and limited-liability protection of a registered company.
• The MCA can revoke the licence for breach of conditions, after which the company must add "Limited" to its name.

Tax and compliance

Registration alone does not grant income-tax exemption. The company must separately register with the Income Tax Department under Sections 12A/12AB, and may obtain 80G approval so that donors get deductions. It files annual returns and financials with the ROC like any company, and is eligible to receive CSR funding from other corporates.