Section – 8 Company

Section – 8 companies are registered with charitable objects such as the promotion of Arts, commerce, science, education, sports, protection of the environment, religion, charity, etc. The act under which the company is registered does not bar the company from profit creation but rather prohibits distributing profit among members. It suggests the utilization of income in charitable work.

A Section – 8 company is similar to a trust or society and is registered under the central Government’s Ministry of Corporate Affairs. Trusts and Societies are registered under State Government regulations. A section 8 company has various advantages when compared to Trust or Society like improved recognition and better legal standing. Section 8 company also has higher credibility amongst donors, Government departments and other stakeholders.

Benefits

Owner’s Limited Liability

The owner’s personal assets are uncharged from the company’s obligations and debts. Their liability stays limited only to the capital subscribed and unpaid by them.

Tax and Compliance Exemptions

The company obtains a special distinct status with its registration under Section – 8 of companies’ act. The company enjoys the tax exemption and the donors can claim an exemption for the donation made. The company is also exempted from the applicability of many compliance-related provisions.

Name and Management

Words such as Association, Foundation, Society, Council, Club, Charities, Institute, Academy, Organisation, Federation, Chamber of Commerce, Development etc are used while naming the company. Trusts are managed by Trustees as per a Trust Deed. Section 8 Company does not have the concept of Trustees. Hence, Section 8 Companies are managed by the Board of Directors based on the MOA and AOA of the Section 8 Company.

Distinct Establishment

The company is a distinct establishment in the eyes of the law, separating it from its managers and owners. The company can run on its own by opening a bank account in its name. Through this account, the company can own assets, enter into the contract with parties and can also sue third parties in any case of default.

No Corporate Title

The company enjoys the benefit of the corporate entity yet it is not entitled to be a corporate company. This exemption is provided so that third parties offer their attention to the company’s purpose and not its status assuming it is profit making organisation.

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Documents Required

1.

Photograph

Latest Passport size photograph of Shareholders and Directors.

2.

PAN Card

PAN Card of shareholders and Directors. Foreign nationals must provide a valid passport.

3.

Identity Proof

Aadhar card and Voter ID/ Passport/ Driving License of Shareholders and Directors.

4.

Address Proof

Latest Telephone Bill /Electricity Bill/ Bank Account Statement of Shareholders and Directors.

5.

Business Address Proof

Latest Electricity Bill/ Telephone Bill of the registered office address.

6.

NOC from owner

No Objection Certificate to be obtained from the owner(s) of registered office

7.

Rent Agreement

Rent Agreement of the registered office should be provided if any.

8.

Statement of Income & Expenditure

Estimated Statement of Income & Expenditure for the next three years

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