NGO Section-8 Company

SECTION 8 COMPANY is a non-profit company formed and registered under section 8 of the Companies Act, 2013 specifically to promote social welfare, education, art, science, religion, charity, and other noble causes prioritizing social impact over financial gains. In simpler terms, it is a company formed for not-for-profit purposes

Document required for registration:-

Proposed Name of the company;
Main Object of the company;
Registered office address proof (not older than 2 months) i.e. Telephone Bill/ Electricity Bill;
Phone no of company
Email id of company
Authorized Share Capital and Paid-up share capital
Name of Bank in which current account to be opened
Number of directors and their necessary documents-

Passport Size color photo and Phone and Email of all directors;
Self-attested KYC documents of all the directors (Aadhar card, PAN card)
Latest Bank Statement/ Telephone bill/ Mobile Bill/Electricity bill (Any one document in the name of the subscriber not older than 2 months), as address proof
Digital Signature Certificate of all Shareholders/Directors;

Advantages of section 8 company:-

Access to Tax Benefits: They are exempt from paying income tax on their surplus income. Section 8 Companies are eligible for tax deductions under Section 80G of the Income Tax Act.
Exemption from the use of the word “Limited” and “Private Limited”: It is not required to use the words “Limited” and “Private Limited” in their name, but they do need to use a suffix such as “Foundation,” “Association,” etc. to indicate their non-profit nature.
Credibility and Trust: The Companies are perceived as trustworthy due to their non-profit nature and commitment to social causes Donors, volunteers, and stakeholders often trust these organizations more readily.
Zero Stamp Duty: They are exempted from paying any stamp duty on MOA and AOA, making the process of incorporation easier and cost-effective
Eligible for Foreign Contribution: Section 8 Companies are eligible to receive overseas funds in donations provided they are registered under the Foreign Contribution Regulation Act.

Disadvantage of section 8 company?

Profit Distribution (Dividends) is not permissible- Section 8 Companies are prohibited from distributing dividends to their members
Profit cannot be the prime objective- The profit that the Section 8 Companies made is used to meet objectives like arts, commerce, and science. It cannot be used by the director or shareholders by any means.
Prohibition on appointing a member as an officer– The members of the Section 8 Companies cannot be appointed as the officers.
No Amendments in MOA and AOA– The members cannot make changes in the MOA and AOA of the company because the license is provided by the Central government