Non-ProfitOrganization (Section 8 Company)
A Section 8 Company is a preferred business structure in India for organizations dedicated to charitable, social, or non-profit objectives.
Governed by the Companies Act, 2013, it provides a legal framework that allows entities to operate with limited liability while enjoying tax exemptions and government benefits.
Whether you are an NGO, trust, foundation, or social enterprise, registering as a Section 8 Company offers numerous advantages, including greater credibility, legal recognition, and access to funding through grants and donations — making it an ideal choice for organizations committed to social impact.
A Section 8 Company is a type of business entity in India governed by the Companies Act, 2013, specifically designed for non-profit organizations. It is established to promote charitable objectives, such as education, arts, sports, social welfare, and environmental protection. Unlike other companies, a Section 8 Company does not distribute profits to its members but instead reinvests them for furthering its objectives.
Any individual or group of individuals, companies, or organizations can register a Section 8 Company, provided they intend to engage in charitable, social, or non-profit activities.
• Minimum Number of Directors: At least two directors for a private Section 8 Company and three directors for a public Section 8 Company, with a maximum of 15 directors.
• Minimum Number of Members: Minimum of two members for a private Section 8 Company and seven members for a public Section 8 Company.
• Minimum Capital: There is no mandatory minimum capital requirement, but funds must be used for the non-profit objectives of the company.
• Registered Office: A registered office address is mandatory, with proof such as a rental agreement or utility bill.
The following documents are required: • PAN card of the directors and members • Aadhaar card or other identity proof • Address proof (e.g., utility bills or bank statements) • Passport-size photographs • Proof of registered office address (e.g., rental agreement or sale deed) • Email and Mobile numbers
The registration process typically takes 15-30 working days, depending on document submission and approval from the Registrar of Companies (ROC) and the Central Government.
• Director: A director is responsible for managing the day-to-day operations and decision-making of the company. • Member: A member is an owner or subscriber of the company, ensuring that funds are utilized for charitable purposes. In a Section 8 Company, members cannot receive dividends or profits.
No, a Section 8 Company requires at least two members for a private company and seven members for a public company. However, a One Person Company (OPC) is an alternative structure for solo entrepreneurs and the said is for Profit organisation.
A Section 8 Company must comply with: • Annual filing of financial statements and returns • Conducting board and general meetings as per legal requirements • Maintenance of statutory registers and records • GST, TDS, and income tax filings, if applicable
The cost varies based on factors like professional fees, government charges, and stamp duty. Contact us for a detailed quote tailored to your needs.
Yes, foreign nationals and entities can register a Section 8 Company in India, subject to compliance with Foreign Contribution Regulation Act (FCRA) and Foreign Direct Investment (FDI) guidelines for receiving foreign donations or grants.
Once the Section 8 Company is incorporated, you will receive the Certificate of Incorporation, PAN, and TAN. You can then: • Open a corporate bank account • Apply for GST registration (if applicable) • Start operations and apply for tax exemptions under Section 12A and 80G of the Income Tax Act For more queries or assistance, feel free to contact our team!"
Do's
For Shareholders:
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Understand Shareholding Rights:
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Familiarize yourself with rights like voting, receiving dividends, and inspecting company records.
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Participate in Meetings:
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Attend Annual General Meetings (AGMs) or Extraordinary General Meetings (EGMs) to stay informed about the company's progress.
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Stay Updated on Resolutions:
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Be aware of decisions requiring shareholder approval, such as issuing new shares or amending the Articles of Association (AoA).
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Transfer of Shares:
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Comply with the transfer process outlined in the company’s AoA.
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For Directors:
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Obtain a Director Identification Number (DIN):
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Ensure your DIN is active and updated in the Ministry of Corporate Affairs (MCA) database.
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Board Meetings:
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Conduct the first board meeting within 30 days of incorporation and hold at least 4 board meetings annually (1 every quarter).
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Maintain Statutory Records:
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Ensure registers like the register of members, directors, and share transfers are updated.
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Compliance Filings:
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File annual returns, financial statements, and other periodic filings (like DIR-3 KYC, MGT-7, and AOC-4) with the Registrar of Companies (RoC).
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Ensure Tax Compliance:
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Deduct and deposit TDS, file GST returns, and adhere to other tax obligations.
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Ensure Proper Governance:
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Implement internal controls, ensure transparency, and prevent conflicts of interest.
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For CEO & CFO:
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Strategic Planning:
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Develop and execute business strategies to achieve the company's goals.
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Financial Oversight:
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Ensure proper maintenance of financial records, budget adherence, and timely audits.
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Regulatory Compliance:
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Stay informed about legal and financial regulations affecting the company.
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Stakeholder Communication:
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Regularly update directors and shareholders on financial performance and other critical matters.
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Performance Monitoring:
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Monitor the company’s operations and take corrective measures when necessary.
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Don'ts
For Shareholders:
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Interfere in Management:
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Avoid micromanaging the day-to-day operations; this is the directors’ responsibility.
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Ignore Company Notices:
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Failing to respond to company resolutions or voting can affect your interests.
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Transfer Shares Arbitrarily:
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Follow the AoA’s stipulated procedure for transferring shares to avoid legal disputes.
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For Directors:
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Non-Compliance with Legal Duties:
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Failing to maintain records or submit returns can lead to penalties.
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Conflict of Interest:
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Avoid engaging in transactions where personal interests conflict with the company’s interests.
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Neglect Corporate Social Responsibility (CSR):
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If applicable, ensure CSR obligations are met (required for companies exceeding thresholds in turnover, net worth, or profit).
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Default on Statutory Payments:
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Ensure timely payment of taxes, PF, ESI, and other dues.
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For CEO & CFO:
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Mismanagement of Funds:
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Avoid misuse or misallocation of company resources.
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Delay in Financial Reporting:
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Ensure timely preparation and submission of financial reports to prevent non-compliance.
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Ignore Risk Management:
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Overlooking risks like market competition, cybersecurity, or compliance issues can be detrimental.
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Underestimate Stakeholder Expectations:
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Ignoring feedback from stakeholders, including employees and customers, can harm the company’s reputation.
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Limited Liability
Protection
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The liability of members and directors is limited to the amount they contribute to the company.
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In case of financial losses or legal disputes, personal assets remain safeguarded.
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This ensures financial security for promoters and founders, making it a safer option than sole proprietorships or informal charitable organizations.
Enhanced Credibility and Public Trust
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Section 8 Companies are registered with the Ministry of Corporate Affairs (MCA) and regulated under the Companies Act, increasing their legitimacy.
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They are perceived as more reliable than informal NGOs, societies, or trusts, making it easier to attract partnerships, funding, and government support.
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Many CSR funding initiatives and international grants prioritize working with legally registered entities like Section 8 Companies over unregistered charitable bodies.
Ease of Ownership Transfer and Succession Planning
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Unlike sole proprietorships or unregistered NGOs, ownership and management in a Section 8 Company can be easily transferred to new members or directors.
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This makes it suitable for long-term projects, large-scale social initiatives, and legacy-driven organizations.
Separate Legal
Entity
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A Section 8 Company is a distinct legal entity, independent of its promoters and members.
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It can own property, receive donations, enter into contracts, sue, and be sued in its own name.
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This legal recognition enhances trust and credibility, making fundraising and operations more efficient.
Tax Benefits and Exemptions
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Section 8 Companies can apply for 80G and 12A registration under the Income Tax Act, allowing donors to claim tax deductions on their contributions.
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They also enjoy exemptions from income tax, stamp duty, and other levies, ensuring maximum utilization of funds for charitable purposes.
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Unlike other businesses, profits generated must be reinvested in the company's objectives, further qualifying for tax benefits.
Compliance and Transparency for Better Governance
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A Section 8 Company is required to maintain proper financial records, file annual returns, and undergo audits, ensuring accountability and transparency.
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This increases credibility with government bodies, donors, and beneficiaries, making it easier to attract long-term support.
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Unlike informal charities, compliance requirements ensure funds are used ethically and efficiently.
Legal Protection Against Misuse of Funds
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• Since Section 8 Companies are regulated by the Companies Act and MCA, they cannot misuse funds for personal gain.
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This ensures transparency and safeguards donors’ contributions, making it a trusted vehicle for philanthropic work.
Ease of Fundraising and Financial Assistance
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A Section 8 Company can raise funds from government grants, CSR (Corporate Social Responsibility) contributions, international donations, and public funding.
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Banks, financial institutions, and donors prefer supporting legally registered non-profits, improving financial sustainability.
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Unlike unregistered NGOs or charitable trusts, a Section 8 Company can apply for 80G and 12A certifications, enabling tax benefits for donors and making fundraising easier.
No Minimum Capital Requirement
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Unlike private or public limited companies, there is no mandatory minimum capital requirement for incorporating a Section 8 Company.
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This makes it accessible for small organizations, grassroots initiatives, and non-profits with limited financial resources.
Eligibility for Government and CSR Funding
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Section 8 Companies are eligible for government grants, funding schemes, and CSR contributions from corporate entities under the Companies Act, 2013.
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Many large businesses prefer partnering with Section 8 Companies for CSR activities, making them a preferred choice for corporate collaborations.
Perpetual Succession for Long-Term Sustainability
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The company’s existence is not affected by changes in management, resignation, death, or incapacity of members.
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Since it is a legally recognized entity, it continues to function irrespective of changes in ownership or directorship.
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This ensures long-term impact and operational stability, making it a preferred structure for charitable and social enterprises.
Exemption from the ‘Private Limited’ or ‘Limited’ Suffix
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A Section 8 Company does not need to use ‘Private Limited’ or ‘Limited’ in its name, distinguishing it from commercial businesses.
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This emphasizes its charitable purpose and helps in building a strong brand identity in the non-profit sector.
Global Recognition and International Partnerships
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A Section 8 Company can collaborate with international NGOs, non-profits, and funding agencies for cross-border initiatives.
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It is a recognized legal structure globally, increasing credibility and making it easier to receive foreign funding under FCRA (Foreign Contribution Regulation Act) compliance.
Encourages Social Entrepreneurship and Innovation
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Section 8 Companies allow social entrepreneurs to build sustainable ventures focused on impact while benefiting from legal recognition and funding opportunities.
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They can operate like social enterprises, combining business efficiency with charitable goals, without compromising on governance or transparency
