Startup Salahkar

Puja Mohan & Associates
Company Secretaries
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  • startupsalahkar@gmail.com
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Section 8 Company

A Section 8 company registration under the Companies Act, 2013 or a Section 25 Company as per the Companies Act,1956 is an organisation registered with an objective of promoting the fine arts, science, literature, or knowledge sharing for a purposeful matter or for charity. Section 8 companies are regulated through the Companies Act, 2013. 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.

  • The company should be registered for charitable purposes
  • Income and profits should be used towards these objects
  • The company should not pay any dividend to its members.
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    Benefits of Section 8 Company

    Tax Exemption

    Section 8 companies enjoy 100% tax exemption as their profits are utilised for charitable purposes, providing a significant tax advantage.

    No Minimum Capital Requirement

    Section 8 entities have the flexibility to adjust their capital structure according to their growth, eliminating the need for a minimum capital requirement.

    No Stamp Duty

    Section 8 companies are exempt from paying stamp duty during the registration process, reducing the cost of establishment.

    Separate Legal Entity

    Section 8 companies have a separate legal identity and perpetual existence, enhancing credibility and providing autonomy.

    Increased Credibility

    Strict legal compliance frameworks ensure that Section 8 companies have a higher level of credibility and trustworthiness compared to NGOs and trusts.

    No Title Required

    Section 8 companies have the freedom to choose a name without the requirement to add the term 'Section 8' to their name, allowing for greater naming flexibility.

    Eligibility Criteria:

    1. An Individual or HUF or limited Company is eligible to start a Section 8 company registration in India
    2. Two or more persons who will act as a shareholder or Director of the company should fulfil all the requirements and compliances of the Section 8 Company registration
    3. At least one of the directors shall be a resident of India. However, a firm may be a member of the company registered under this section
    4. The objective should be the promotion of sports, social welfare, the advancement of science and art, education and financial assistance to lower income groups
    5. The surplus generated must be used for meeting the principal objective of the section 8 company registration
    6. Founders, members, and directors of the company cannot draw any remuneration
    7. There should be no direct or indirect distribution of profits to the company’s directors and members
    8. The business should have a defined three-year project plan and vision.

    Documents necessary:

    • DSC and DIN of the Directors.
    • Objectives and proposed work of the company.
    • Financial statements like assets and liabilities, the projection for 3 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 2 months.