Over the time we have received a lot of queries regarding section 8 companies, people seems to get confused between section 8 companies, societies and trust all these terms are different from each other. The objects and requirements of all these legal entities are not same.
So we decided to explain our readers what exactly section 8 company means. If any person go through the definition of section 8 company as it is, it states that any company established ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company or Section 25 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.
A section 8 company like any other company is registered under MCA unlike trust which is registered under state government.
Requirements for registration of section 8 companies is also similar to that of a private limited company such as listed below
Minimum Requirements for Section 8 Company
Minimum of two shareholders for incorporation are pre-requisite;
Minimum two Directors are mandatory However, Directors and shareholders can be the same individuals;
At least one Director shall be Indian Resident;
No Minimum capital is required for incorporation of a Section 8 company;
PAN Card is a mandatory requirement for Indian nationals involved;
Any one of the Identity Proof is required which may be a Voter ID/Aadhar Card/Driving License/Passport; but a Passport is mandatory for a foreign national involved as a proof of identity in case of foreign nationals;
Proof of Residence which may be any utility bill for example Electricity Bill/Telephone Bill/Mobile Bill or a Bank Statement;
Address Proof for given Registered Office this may include copy of rent agreement along with latest rent receipt and copy of latest utility bill in the name of landlord necessary for establishing his ownership rights along with a no objection certificate from the owner of the premises, this condition is applicable for rented premises;
In cases where the premises or registered office are owned by a Director or Promoters, any documents establishing the ownership such as Sale Deed/House Tax receipt etc along with the no objection certificate is required to be furnished.
So now a very pertinent question arises when requirements and processes for registration of a section 8 company as similar to any of the private limited company registration what makes it different and what are the benefits of incorporating a section 8 company.
Below are the key benefits of a section 8 Company Registration:
1) Exemptions and privileges under Companies Act.
2) Tax deductions are offered to donors under section 80 G of the Income Tax Act.
3) Any section 8 company may be formed with or without using any share capital.
4) Exemption in stamp duty for registration.
More on Section 8 Company:
- - Advantages of registering a Section 8 Company (Non-profit organization, Trust or Charity).
- - How to Register a Section 8 Company in India.
- - Comparison between Section 8 Company Trust & Society
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