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Register your Section 8 Company seamlessly with FOXTAX
- What is a Section 8 Company?
- Section 8 Company vs Trust vs Society
- Eligibility for Section 8 Company Registration
- Documents Required for Registration
- Tax Benefits of a Section 8 Company (12A & 80G)
- Step-by-Step Registration Process
- Time Required for Section 8 Company Registration
- Why Choose FOXTAX?
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What is a Section 8 Company?
Section 8 Company is one of the forms of company registration governed by Section 8 of the Companies Act, 2013 mostly for conducting activities other than for earning profit.
Non profit NGOs, social organisations, and charity houses in India largely depend on this legal structure.
The Fundamental Rule: profit and income shall be used for only those purposes that the society aims to support through their work such as research, culture, or public service.
No-Dividend Law: members or directors of the club/company shall not claim to be dividend.
License: Unlike regular companies, a Section 8 company must obtain a special certificate of company under Section 8 from the Central Government i. e.
Ministry of Corporate Affairs to carry on with its business.
Best Time to Register
- Scaling Up: When the scope of your social mission exceeds the potential of a small-scale charity organisation and it needs incorporation as a professional business entity.
- CSR Funding: When your NGO wants to raise corporate social responsibility (CSR) funds from a large corporation. Most CSR budgets are spent with Section 8 companies because they provide a high level of accountability.
- Getting international funds: When your NGO plans to work internationally and is applying to get FCRA (Foreign Contribution Regulation Act) status for receiving foreign donations.
- Building a Brand: When your NGO wishes to run its operations using a unique name and avoid the ending like “Private Limited”. Such a strategy is very much in sync with companies under Sections 8.
Reasons for Selecting Section 8 Company
- International Trust: Since the company is registered under national law, it will be very hard for any bank or international donor not to trust such a company.
- Perpetual Succession: The company is a separate legal body. It keeps alive forever, even if members, directors, or others get changed or die.
- Protected Directors: If the NGO gets into debts, directors will not lose their personal properties because there is Limited Liability. This is different from a Trust where, in case of debts of the NGO, trustees can lose their personal assets.
Comparing Section 8 Company with Trust and other forms of NGOs
Your legal setup affects your NGO's performance. Traditionally, Trusts and Societies are considered, but a Section 8 Company is highly preferable for its greater legitimacy and transparency and because of this very popular among international donors. To select the most suitable structure for your organisation, use the table below.
| Feature | Section 8 Company | Trust / Society |
|---|---|---|
| Credibility | High (WorldWide Recognition) | Moderate (only local recognition) |
| Transfer of ownership | ownership transfer is quite easy | Not transferable/Difficult |
| Foreign Funding | most favored for FCRA | Favour of donation |
| Name Suffix | No " Pvt Ltd" or " Ltd" at the end. | The name remains as it was. |
| Transparency of Work | Highest level of openness (the company has to make public its annual reports filed with ROC). | Very low level of openness |
| Act | Companies Act | Societies Act / Trusts Act |
Qualifications for Company Registration: What are the Requirements?
- Individuals: Any two people or individuals (even foreign nationals, provided that one director is a resident of India). This satisfies the minimum directors for Section 8 company condition.
- Existing Entities: Even a partnership firm or a Private Limited company can join a Section 8 company as members.
- Social Entrepreneurs: People focused on arts, science, sports, education, research, social welfare, or environmental protection
Documents Required for a Section 8 Company Registration
For Directors & Shareholders
- PAN Card
- Aadhaar Card
- Latest address proof (bank statement or utility bill)
- Passport-size photograph
For Registered Office
- Utility bill (not older than 2 months)
- Rent agreement or ownership proof
- No Objection Certificate (NOC) from owner
Eligibility & Basic Requirements
- Minimum 2 Directors
- Minimum 2 Shareholders
- Minimum paid-up share capital as prescribed by law
- Registered office address in India
Section 8 Company Registration Advantages
Exemption of Income Tax (12-A & 80G)
This Section 8 company is not liable to income tax on its profits and is, this way, called tax-free under 12A, and the persons (the donors) making donations are also entitled for 50% deduction on their taxes under 80G.
Nil Stamp Duty
Exempted from paying stamp duty on the Memorandum and Articles of Association, which saves significant initial costs. This quite a bit reduces the start-up costs and overall registration expenses of the Section 8 company.
No Minimum Capital
The minimum capital amount is not prescribed for the paid-up capital in any way (and so, one may even start the registered company with a minimum fund of ₹0).
No Mandatory "Limited" Usage
There is no legal requirement to put "Private Limited" or "Limited" at the end when one chooses the name of their Section 8 Company.
Simple Compliance
Several relaxations are available under the Companies Act to facilitate a smooth experience (e. g. Shorter notice period of 14 days for meetings). But, even with the ease of procedures, it is mandated to file an annual return every year for Section 8 companies, as the Act gives no exemption from this filing.
Change of Ownership
Ownership or management can be changed easily using board resolution only whereas there was a need to go through very tedious procedures under the system of Trusts.
Section 8 Company Registration Process
We at FOXTAX have developed a systematic, efficient and compliant mode of registering a Section 8 company:
Business Consultation & Planning
We help in analyzing your objectives like business growth or capitalization, structure of the company, and compliance regulations.
Collecting and Verifying Necessary Documents
FOXTAX would make sure to collect and verify the documents for directors shareholders as well as the registered office of your Section 8 company.
Approval of the Company Name
The company name approval of a Section 8 company is the next step for us. The name should also meet the MCA guidelines.
DSC & DIN Registration
Digital Signature Certificate (DSC) and Director Identification Number (DIN) are obtained.
Documents to Incorporate
The MOA (Memorandum of Association), the AOA (Articles of Association), and the incorporation forms are to be drafted and submitted to the Ministry of Corporate Affairs (MCA)
Certificate of Incorporation & PAN/TAN Number
Upon approval, MCA issues the Certificate of Incorporation along with PAN and TAN.
Frequently Asked Questions (FAQs)
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