Benefits of Opening a Section 8 Company in India
Incorporating a Section 8 company in India offers numerous advantages, some highlighted below.
- Tax Exemption
- No Minimum Capital Requirement
- Separate Legal Entity
- Increased Credibility
- No Title Required
Mandatory legal requirements for Section 8 Company
Before applying for the incorporation process of a Section 8 company in India, specific legal requisites must be fulfilled. These requirements are as follows:
Number of Directors
A minimum of two directors is required if the Section 8 entity intends to operate as a private limited company. However, a minimum of three directors are required if the entity aims to operate as a public limited company.
Number of Members
If the Section 8 Company aims to function as a private limited company, the number of members is capped at 200 by the Ministry of Corporate Affairs (MCA). However, there is no such limit for Section 8 entities with a business structure like a public limited company.
Capital Requirement and Name
According to the Companies Act 2013, Section 8 entities are not required to maintain a minimum paid-up capital. Moreover, NGOs operating as Section 8 entities are not obligated to affix terms like private limited or limited in their name.
Company Objects
Only entities with non-profit objectives are eligible for Section 8 registration. The Memorandum of Association and Articles of Association must clearly state such goals for which the Company is established. Any profits the Section 8 entity generates must be utilized for charitable purposes or reinvested in the entity. The profit of Section 8 entities is not available to its members in any form. These legal requisites ensure that Section 8 companies operate with transparency and the intended purpose of promoting social welfare.
Documents Required
The following documents are required to complete the incorporation process for a Section 8 company in India:
- Articles of Association (AOA) and Memorandum of Association (MOA)
- Declaration by the first director(s) and subscriber(s) (an affidavit is not required)
- Proof of office address, such as a copy of utility bills like electricity, water, or gas bill
- Copy of the certificate of incorporation (COI) of an overseas corporate body (if any)
- A resolution passed by the promoter company
- Consent of Nominee (INC-3)
- Residential and identity proof of nominees and subscribers
- Applicant's identity and residential proof
- Digital Signature Certificate (DSC)
- Declaration of unregistered companies.