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Section 8 Company registration

A section 8 Company is a type of corporate entity primarily incorporated for non-profit purposes. It is one of the options; others being a charitable society or charitable trust, to pursue charitable and non-profit objects in an organised manner.

It is commonly referred to as a Section 8 Company because the process of its incorporation is contained in Section 8 of the Companies Act, 2013. (Earlier under the Companies Act, 1956, it was known as a Section 25 Company).

Section 8 ( along with other applicable sections) contain the relevant provisions for its incorporation. Further, specifically  Rules 19 to 23 of the Companies (Incorporation) Rules, 2013 ( along with other applicable Rules).apply to it.

As per section 8, an individual or an association of individuals are eligible to be registered as Section 8 Company if it holds certain  below-mentioned intentions or objectives. The objectives have to be confirmed to the satisfaction of the Central Government.

Companies can go for Section 8 license when:
  • it intends to promote science, commerce, education, art, sports, research, religion, charity, social welfare, protection of the environment or alike other objectives;
  • intends to invest its profits and other income for above objects only.
  • does not intend to pay any dividend to its members.

Incorporation of Section 8 company has a distinguishing feature – issue of a License to not include the words – ‘Limited’ or ‘Not Limited’ in its name. The jurisdictional Regional Director (acting as a representative of the Central Government) grants this license.

Earlier the process of incorporation of a Section 8 Company was complicated and time consuming. This was mainly due to the process of obtaining a license which was a separate step by itself.

However with the amendments in 2019, the process has become a lot simplified. Now the MCA grants the license along with the approval of the incorporation process itself.

The process of incorporation of a Section 8 Company is , in many ways, similar to that of a private limited Company. (You can check entire details here) .

The specific additional requirements for incorporation of a Section 8 Company are :
  1. Memorandum of Association of a Section 8 Company shall be specifically in Form No. INC -13.
  2. Declaration under form INC 15, from all the applicants of incorporation
  3. Declaration under Form INC 14 by a designated professional that the MoA and the AoA have been drawn up in conformity with applicable Section and Rules.
  4. Estimated Income and Expenditure for the next 3 years; specifying the income and objects of expenditure.

Corporate Compliance Team at Entrecap Business Services and the professionals engaged by us have vast experience in the nuances of incorporation of Section 8 Company. We shall be glad to assist you professionally in any matter pertaining to Section 8 Company.

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