Section 8 Company is
A NGO or Non Profit Organisation is an entity that operates for promotion of art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
In India, an NGO can be registered as any of the three structures being Company under Section 8 of the Companies Act, 2013(section 25, companies act 1956), Trust or Society.
Section 8 Companyformat of a NGO is most popular form of NGO in India. It is easy to register, run or manage a Section 8 Companyin comparison of a Trust and a Society.
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Advantages of Registering Section 8 Companies
1) Tax Exemption
Numerous Tax exemptions are provided to Section 8 Companies, specifically to the donors who are contributing to Section 8 Companies, they can claim the Tax exemption against the donation they made to a Section 8 company.
2) No minimum capital requirement
There is no prescribed limit over section 8 companies for the minimum capital requirement unlike other entities such as public limited, but the capital structure can be altered at any stage as the required for the growth of the company.
3) No stamp duty payable
A section 8 Company is exempted for the payment of stamp duty applicable for registration as applicable in case of other structures such as private limited or a public limited company.
4) Separate Legal entity
A Section 8 Company also holds its own identity like other companies structures, and has its own separate legal standing from its member. A Section 8 Company also has a perpetual existence.
5) Credible
A Section 8 Company has more credibility as compared to any other Non-profit organization structure be it a Trust or Society. As it is a licensed by the central government. It has more stringent regulations such as no change in MOA and AOA can be done at any stage or situation in a Section 8 Company. A section 8 company due its strict compliances as regard to functioning has a more reliable image in comparison to other legal structures.
6) No title required
Unlike the names requirements of the private limited or a public limited company, a section 8 company does not require to use a suffix next to its name.
FAQ’s
How much minimum capital required to form a section 8 Company?
No minimum paid up capital is required to register Section 8 company.
Who can be a director of a Section 8 company?
The director required must be a natural person and above 18 years of age. He may or may not be a resident of India
What is the minimum and maximum limit of directors to incorporate a Section 8 company?
Toggle content goes here, click edit button to change this text.Minimum two directors are required if incorporated as private limited and minimum three directors are required if incorporated as a public limited company. Maximum there can be 200 members if incorporated as private limited, but if incorporated as public limited there is no limit as such.
Can a Foreign National or an NRI be a Director in a Private Limited Company?
Yes, a Foreign National or an NRI can be a Director of a Private Limited Company in India after obtaining Director Identification Number.
Is it necessary to have a charitable object to register a Section 8 company?
Yes, it important to have non-profit motive to incorporate a Section 8 company.
Can Section 8 Companies distribute its profit to anyone?
Profit or Income of Non Profit Company can only be used for promotion of the charity work in which it is involved.
Can promoters of Non Profit Company can be employed as paid employee of the Company?
No. Promoters of Non profit company can be employed as paid employee of the company.