Who Can Form a Section 8 Company in India

Quick Summary

To register a Section 8 Company in India, specific criteria must be followed under the Companies Act, 2013. Anyone, including individuals or members of a Hindu Undivided Family (HUF), can start a Section 8 company in India, as long as there are at least two people ready to be directors or shareholders who meet all the essential requirements. At least one director needs to be a resident of India.

The company’s main aim should focus on social welfare causes. The founders, members, and directors aren’t allowed to take any salary or perks, and the company can’t share profits among them in any form, directly or indirectly. (shall ,must ,cant words not to use)

Overview

The concept of Section 8 companies was introduced in the Companies Act 1913, which permitted companies with charitable objects. An NGO established as a Section 8 company under the Companies Act, 2013 (‘Act’) is governed by the Ministry of Corporate Affairs (‘MCA’), whereas the NGO registered as a trust or society is governed by the Registrar of the State under the State Government. However, the main purpose of establishing a company as a Section 8 company is to promote non-profit objectives.

A Section 8 structure is ideal for NGOs, charitable trusts, or non-profits aiming to promote education, social welfare, environmental protection, or other community-focused objectives.

Purpose of a Section 8 Company (NGO) – Meaning and Objectives

A Section 8 Company is a special type of non-profit organisation registered under the Companies Act, 2013, with the main purpose of promoting charitable and social objectives. These companies are dedicated to working for social causes that benefit society at large, such as:

Commerce and trade development Art and culture promotion Science and technology advancement Sports and physical education Quality education and research Social welfare and community development Religious and charitable activities Environmental protection and sustainability Any other purpose connected to these social objectives

When the Central Government is satisfied that any individual or group intends to form a company for these non-profit purposes, it issues a license to operate as a Section 8 Company. Unlike regular companies, the profits or income earned by a Section 8 company are reinvested in achieving its objectives, rather than distributed as dividends to its members or shareholders

Who Can Apply for Registration of a Section 8 Company?

Any individual or group of individuals in India can apply to register a Section 8 Company under the Companies Act, 2013, provided they meet certain conditions. This type of company is meant for those aiming to promote social, charitable, educational, or environmental causes without any personal profit.

Eligibility Criteria to Apply Section 8 Company

To qualify for registration, the applicants must prove to the Central Government that:

Individuals (Indian or foreign nationals) with the intention to work for charitable or social goals.

Registered partnerships, societies, or trusts looking to convert into a Section 8 company for better legal standing.

Corporations or institutions seeking to undertake CSR (Corporate Social Responsibility) activities under a formal company structure.

Key Compliance Check

Before approving, the Central Government, typically through the Registrar of Companies (RoC), must fully review the applicant’s intent and submitted documents to ensure strict alignment with Section 8’s legal provisions. Only after this scrutiny, if the application satisfies all requirements, is a special Section 8 license granted, enabling non-profit limited company registration.

This key compliance check is vital, as the license is mandatory and is only issued after confirming that the company’s objectives are genuinely for charitable, social, or similar nonprofit purposes and that all documentation complies with the Companies Act, 2013.

Regulation for the Formation of Section 8

If you are going to start a Section 8 company, it's mandatory to follow the rules and regulations prescribed under the Companies Act, 2013:

You need to maintain books of account and file returns with the Registrar of Companies.

Remember that a Section 8 company cannot make any changes to the provisions of the MoA and AoA without the prior approval of the Central Government.

It is also necessary to follow the provisions of the Income Tax Act and the GST Law

Process of Incorporation of a Section 8 Company

Registering a Section 8 Company in India is a straightforward process if you follow the steps carefully.

Step 1: Prepare Your Application (Form INC-12)

Submit Form INC-12 to the Registrar of Companies (RoC). This form is the official request for incorporation under Section 8 of the Companies Act, 2013.

Step 2: Draft MOA & AOA (Form INC-13)

Create a Memorandum of Association (MOA) and Articles of Association (AOA) in the prescribed format. You have to attach the scanned copy of the necessary documents and submit it online on the MCA Portal . Ensure your objectives clearly reflect the non-profit purpose.

Step 3: Legal Declaration (Form INC-14)

Attach a declaration from a practicing Advocate, Chartered Accountant, Cost Accountant, or Company Secretary. This certifies that your MOA and AOA comply with all Section 8 provisions. Must be on stamp paper and duly notarized.

Step 4: Prepare Your 3-Year Financial Estimate

Submit an income and expenditure plan for the next three years. Specify funding sources and planned spending aligned with your objectives.

Step 5: Applicant Declaration (Form INC-15)

Each applicant must provide a notarized declaration that all legal requirements are met. Use the prescribed format on stamp paper.

Step 6: Director & Subscriber Declarations (Form INC-9)

All subscribers and first directors must submit Form INC-9. Complete the appropriate state stamp paper and notarize.

Forms Required for Section 8 Company Registration

To register a Section 8 Company under the Companies Act, 2013, certain key government forms must be filed at various stages to ensure proper compliance and transparency. Important forms include:

Form INC-12 , which is the application for the Section 8 license. Form INC-13 , containing the draft Memorandum of Association (MOA) and Articles of Association (AOA). Form INC-14 , a declaration by professionals and members confirming that the MOA and AOA comply with Section 8 requirements. Form INC-15 , a notarized statement by company members about their intent. After licensing approval, the SPICe+ form is filed for company incorporation. These forms collectively ensure the company operates exclusively for charitable, social, or nonprofit objectives with full regulatory oversight.

Each form serves a unique purpose and ensures that the company operates transparently as a non-profit entity dedicated to charitable or social objectives.

Form No.

Purpose

INC-12

Application to the Registrar of Companies (RoC) for obtaining a Section 8 license. Must include MOA, AOA drafts, declarations, and projected income & expenditure for 3 years.

INC-13

Draft Memorandum of Association (MOA) outlining the company’s non-profit objectives. Signed by all subscribers and witnessed.

INC-14

Declaration from a practising CA, CS, CMA, or Advocate confirming compliance with Section 8 provisions.

INC-15

A declaration by each applicant stating that all incorporation rules under Section 8 are complied with.

INC-16

License issued by the Central Government permitting the company to operate as a Section 8 company.

SPICe+ (INC-32)

Application for the incorporation of the company once the license is granted. Enables name reservation and registration in one step.

INC-22

Filed within 30 days of incorporation to intimate the official registered office address.

DIR-2

Written consent from each person proposed to act as a director.

DIR-3

Application for obtaining a Director Identification Number (DIN) for all proposed directors.

DIR-12

Notice of appointment of directors, filed within 30 days of incorporation.

Frequently Asked Questions (FAQs)

Q1. What is a Section 8 company in India?

Ans1. A Section 8 company is a nonprofit organization registered under the Companies Act, 2013, dedicated to promoting charitable, educational, or social welfare objectives. Such companies reinvest all profits to further their mission and are governed under special legal regulations ensuring transparency and compliance.

Q2. Who can form a Section 8 company?

Ans2. Individuals, Hindu Undivided Families (HUFs), firms, and companies committed to nonprofit goals can form a Section 8 company. The company must have at least two members and two directors, with at least one director being a resident of India.

Q3. Can a foreign national be a director in a Section 8 company?

Ans3. Yes, foreign nationals can be directors, but at least one director must be a resident of India as per MCA guidelines.

Q4. Is there a minimum capital requirement for forming a Section 8 company?

Ans4. No, there is no minimum capital requirement to register a Section 8 company.

Q5. How long does the Section 8 company registration process take?

Ans5. Typically, it takes 2 to 4 weeks, depending on document readiness and government processing times.

Q6. Are Section 8 companies eligible for tax exemptions?

Ans6. Yes, they can apply for various tax exemptions under the Income Tax Act, follow compliance and approval by the tax authorities.

Who Can Form a Section 8 Company in India?