Government of India | NITI Aayog

Section 8

What is a Section 8 Company?

Widely known as Section-8 companies, these organizations are registered under the Section-8 of Companies Act 2013. These companies intend to promote art, commerce, sports, safety, science, research, healthcare, social welfare, religion, protection of the environment, etc.

The main object of these companies ensure the promotion of above-mentioned fields, provided the profit is used for promoting only objects of the company (Sec 8(1)(b)). Sec 8 (1) (c) states the prohibition of payment of any dividend to its members.

Ministry of Corporate Affairs (MCA), administers and maintains the rules and regulations through ROC in all of the states of India.

These companies do have members and directors, but unlike other companies, they are based more on volunteers and promoters. They, like other companies, are considered to be separate legal entities, however, they are indulged in promoting a product. They are not seen as manufacturers but mere service providers. Their services majorly include creating awareness and helping the public. These companies, unlike others, are generally dependent on donations and not so much on loans.  A partnership firm can also become a member of such a company. Any company and firm, except One Person company, can convert itself into a Section 8 Company, again by following a proper procedure as mentioned in The Companies Act.

The name of Section 8 Company is generally different from normal companies. Rather than using private limited or public limited, you will find words like foundation, association, federation, confederation, the council in the Section 8 Company’s name. Section 8 Company is provided with many benefits that are not given to other companies.

Eligibility for Section 8 Company Registration:

  • Object must be Charitable or to promote arts, science, commerce etc
  • Intends to apply all its profit in promoting the objectives
  • Assures the prohibiting of the payment of dividends to any of its members

Why go for a Section 8 Company?

They work solely for the general public and all the income and profits are used to promote their objectives. There is no personal profit included. These companies are way more reliable due to their easy management and effective objectives.

There are basically three reasons of forming a Section 8 Company :

  • To attain charitable objectives,
  • To apply the income and the profits derived from the companies to attain such objectives and
  • To not to pay the dividends to its members.