What are the advantages of Section 8 Company?
The Companies Act of 2013 is very comprehensive legislation which comprises a detailed account of different types of company incorporation in India. The different types of companies that are incorporated under the Act are Private limited company, public limited company, section 8 company, limited liability company, one person company etc. So Section 8 is one of the companies that are incorporated under the companies Act of 2013. Below are the different advantages of section 8 companies in India.
If you are looking forward to starting your own Section 8 company or an NGO, you can reach out to us to get your company incorporated as an NGO.
Advantages of Section 8 Company
Section 8 companies, also known as not-for-profit companies, are registered under Section 8 of the Companies Act, 2013. These companies have the following advantages:
- Charitable Objectives: The primary objective of a Section 8 company is to promote art, commerce, education, charity, religion, and other such social welfare activities. The company can undertake any legal activity that falls under this category, without the intention of making profits.
- Tax Benefits: Section 8 companies are eligible for tax exemption under Section 12A and 80G of the Income Tax Act, 1961. This means that the company does not have to pay taxes on its income, and donors who contribute to the company are eligible for tax deductions.
- Limited Liability: Section 8 companies have limited liability, which means that the members or shareholders are not personally liable for the debts of the company. Their liability is limited to the amount of shares they hold in the company.
- Perpetual Existence: Section 8 companies have perpetual existence, which means that the company continues to exist even if the members or shareholders change. This ensures that the social welfare activities of the company are not affected by changes in ownership.
- Greater Credibility: Section 8 companies have greater credibility as they are registered under the Companies Act, which is a recognized legal framework. This makes it easier for the company to attract funding and grants from various sources.
- Easy Transferability of Ownership: Shares of Section 8 companies can be easily transferred, making it easier for members or shareholders to exit the company if they wish to do so.
- Easier to Raise Funds: Section 8 companies can raise funds through donations, grants, and other sources without the need for collateral or security. This makes it easier for the company to raise funds for its social welfare activities.
You can also Read – Features of a Section 8 Company
How to Register a Section 8 Company
To get your section 8 company incorporated, you need to send valid documents such as identity proof, address proof, details of directors and other relevant documents and send it to the MCA portal. But following the process can be complicated and you may need assistance from a professional to register a company for you.
You can contact our team at Professional Utilities and we will help you register a company for you at a minimum cost and within a few days.
To register a Section 8 company, you need certain Documents such as Digital Signature Certificate, Details of director, director identification number, MoA, AoA etc.
After submitting all the documents you need to submit the required fees on the MCA portal to complete the process and then your section 8 company registration will be completed within 7-10 working days.
Useful Resource – How to Register an NGO or a Section 8 Company
Conclusion
In conclusion, Section 8 companies are an excellent option for individuals or organizations looking to promote social welfare activities. We discussed all the advantages of Section 8 Company in India in this article and it can be helpful for the readers to know about the advantages of an NGO registration before actually incorporating one.
To get your Section 8 company incorporated, contact our team at Professional Utilities and get Section 8 company incorporated at Rs 4,999 within 7-10 days.
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FAQs
Q1: What is a Section 8 company?
A Section 8 company is a type of non-profit organization that is registered under Section 8 of the Companies Act, 2013. It is established for promoting charitable or social causes such as education, arts, science, sports, research, religion, or any other non-profit objective.
Q2: Can a Section 8 company earn profits?
Section 8 companies are established for promoting charitable or social causes and not for making profits. However, they can earn profits, but these profits must be reinvested in the company for furthering its objectives, and they cannot be distributed to the members as dividends.
Q3: What are the eligibility criteria for registering a Section 8 company?
To register a Section 8 company, the following criteria must be met:
- The company must be established for promoting charitable or social causes and not for profit.
- The company must have a minimum of two directors and two shareholders.
- The company must have a registered office address.
- The company must have a memorandum of association and articles of association.
Q4: What are the advantages of a Section 8 company?
The Various advantages of a Section 8 company are limited liability, non-profit objective, easy to raise funds, perpetual existence, greater credibility etc.