A Section 8 company under the Companies Act, 2013 or a Section 25 Company as per the Companies Act,1956 is an organization registered with an objective of promoting the fine arts, science, literature, or knowledge sharing for a purposeful matter or for charity. These are the limited companies established under the Companies Act. The Government grants these companies an exclusive license under Section 8 Companies Act. There are three main conditions for granting the license is.
The company should form for the charitable purpose.
Income and profits should be used towards these objects.
The company should not pay any dividend to its members.
Why register Section 8 Company – Benefits
The following are the advantages of incorporating a Section 8 company over other modes of registering an NGO:
It has organised operations and greater flexibility.
Avoids meticulous registration process and no physical presence required.
No requirement of a minimum paid-up capital.
Seamless procurement of tax benefits under section 12A and 80G of the Income Tax Act.
Any partnership firm can be a member in its individual capacity and obtain Directorship.
Documents Required for registration of Section 8 company
DSC and DIN of the Directors.
Objectives and proposed work of the company.
Financial statements like assets and liabilities, the projection for five years etc.
Directors personal documents.
Registered office address documents viz. rental agreement or sale deed in the name of the company, utility bills not older than two months.
