A Section 8 Company is an organization which is registered as a Non-Profit Organization (NPO). NPO/company has its objective of promotion of arts, commerce, charity, education, protection of environment, science, social welfare, sports, research, religion and intends to apply its profits, if any, or other income in promoting its objects. It functions exactly like a limited company including all the rights and obligations that come with such a company. However, it differs from a company in one very crucial aspect, i.e. it cannot use the words “Section 8” or “Limited” in its name.
Timeline for section 8 company registration
It usually takes around 20-30 days to register a section 8/section 25 company. But, this time period depends on the government processing time and therefore may vary further because of it.
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What is Section-8 Company ?
In India, a non-profit organisation can be created by registering a Society under the Societies Registration Acts or registering a Trust or incorporating a Section 8 company with a not for profit motive. Section 8 under the Companies Act, 2013 corresponds to the old Section 25 under the Companies Act, 1956, which was popularly known as “Section 25 Company”, hence the name “Section 8 Company”.
Documents Required For Section 8 Company Registration
Digital Signature Certificate (if you already have it)
Director Identification Number (if you already have it)
Memorandum of Association
Articles of Association
ID proof for members: (Aadhar Card, Passport, Voter ID)
Passport size Photographs
Director’s details (if Members are other Companies/LLPs)
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
Who can form section 8 company
Anyone who is either:
A person (including a partnership firm)
An association of persons
Any existing company
Features of a section 8 company
It gets all the benefits of a limited company.
But, all the limitations of a limited company also apply to it.
It cannot make changes to its MOA or AOA without taking government's approval.
It can convert into any other form of the company but only if it meets the necessary conditions.
The central government can cancel its license if it either does not fulfill its aims or fails to meet other necessary conditions.
It can merge with another company only if the other company has a similar object.
It does not need any minimum capital.
There must be at least two directors.
At least one director must be an Indian resident
Conditions for a section 8 company
A Section 8 company should make sure that its aim is to promote a certain cause. This cause relates to:
Protection of environment or
Any other such object which is similar to above objects.
It uses profits and other incomes only for promoting the above cause.
Does not pay dividend to its members.
If the company fulfills all these conditions, the Central government will issue it the license to carry business. Moreover, along with the license, it will also receive the benefit of not having to add private limited or limited after its name.