What is a Section 8 company?

A Section 8 Company is a specific type of company in India under the Companies Act, 2013. It is established for promoting arts, science, commerce, sports, education, research, social welfare, religion, charity, protection of the environment, or any other such purpose. The key characteristics of a Section 8 Company include:

Non-Profit Objective: The primary purpose is to promote a specific cause, and any profits or income generated are to be reinvested in furthering these objectives. Shareholders do not receive any dividend or profit distribution.

Incorporation Requirements: Similar to other companies, Section 8 Companies must register with the Registrar of Companies (RoC) and obtain a license from the central government. They must comply with the specific provisions under the Companies Act, 2013.

Special Privileges and Exemptions: These companies often enjoy various tax benefits, as they operate for charitable or non-profit purposes. They are also subject to fewer compliance requirements compared to other types of companies.

No Minimum Capital Requirement: There is no minimum capital requirement for setting up a Section 8 Company, providing flexibility to the founders.

Management and Membership: A Section 8 Company must have at least two directors if it is registered as a private company and three if it is registered as a public company. The maximum number of members is governed by the specific rules applicable to private or public companies.

Section 8 Companies are similar to non-profit organizations or NGOs in other countries, focusing on social welfare and development