Section 8 Company Registration

Generally, the companies are formed with the purpose of profit of earning profits. They are formed with a profit motive. A section 8 company defies this objective and is formed with the purpose of promoting the activities such as art, commerce, science, sports, education, research, social welfare and etc. We see that it is non-profit company which has special objectives such as listed above.

It has been growing in popularity and has become so popular that even the newly form groups social are getting registered as section 8 company rather than NGOs or trusts. We see that section 8 companies have become popular and are continuously on the rise in the market. These websites have sole purpose of satisfying the societal objectives for which they stand for.

The definition of the section 8 company is a rather complicated one , it states that a section 8 company is the one which is established for the promotion of the commerce, arts, sports, education, research, social welfare, charity, protection of environment or any other activity of the similar kind given that the income thus generate dis utilized for the purpose of promoting the objects of the company and no dividend is paid to the members of the company.

Thus, we can say that section 8 company is registered under the Companies Act 2013 for charitable purposes or for non-profit- purposes.

The major disadvantage of the section 8 company is that no matter how much does a company earn, it still would not be able to distribute the profits in any form or in any way possible they are strictly prohibited from using even a single penny from the profit for their own purposes. This is the major reason why people still form the NGOs and trusts.

Even though there are many disadvantages, there are many advantages of the section8 company. It has to pay very little or no corporate taxation and also the legal compliances of a section 8 company are very less. Thus we, see that section 8 company if they want to pursue some of the societal objectives which are listed in its MOA.

Section 8 Company are those businesses which are registered under section 8 of the Companies Act, 2013, which is established 'for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object', any other income is utilized for promoting the objects of the company only and no dividend is paid to its members. In other words, Section 8 Company Registration is done under the Companies Act, 2013 for charitable or not-for-profit purposes.
A Section 8 company is registered under the central government (MCA) and others trust and society are registered under the state government. Incorporation of Section 8 company has many advantages as compared to trust and societies as they have higher credibility amongst donors, government departments and other stakeholders.

Advantages of Section 8 Company Registration

Section 8 Companies are registered under the Companies Act, 2013. Hence, the section 8 company registration process and certificate of incorporation are issued by the Ministry of Corporate Affairs, Government of India.
Section 8 Companies used names that contain words like Association, Foundation, Society, Council, Club, Charities, Institute, Academy, Organization, Federation, Chamber of Commerce, Development and more for registration.
Section 8 Companies are managed by the Board of Directors based on the MOA and AOA of the Section 8 Company.
Like a private limited company, a Section 8 Company will also have its own revenue, expenses, profits and losses. However, in a Section 8 Company, the profits can be used only for charitable or not-for-profit purposes which are already mentioned in the MOA.
Section 8 Company can be easily transferred from one person to another by altering the changing the composition of Board of Directors.