Registration of section 8 Company
At PRVS
BUSINESS, we provide exceptional taxation compliance and filing services
tailored for individuals and organizations seeking professional guidance. With
a team of seasoned experts including Chartered Accountants (CAs), Company
Secretaries (CSs), MBAs, lawyers, and advocates, we ensure a smooth and
efficient registration process. Here, we present an exhaustive guide to
understanding and registering a Section 8 Company.
What is a Section 8
Company?
A Section 8 Company is a legal entity formed under the Companies Act,
2013, with the primary objective of promoting commerce, arts, science, sports,
education, research, social welfare, religion, charity, environmental
protection, or similar purposes. Unlike other companies, it operates without
the intention of earning profits, and any surplus generated is reinvested to
further its objectives.
These companies are granted certain exemptions under the Companies Act
due to their non-profit nature. They cannot distribute dividends to their
members, making them ideal for organizations aiming to contribute to societal
development.
Key Points About Section 8 Company
- Non-Profit Nature: Section 8
Companies exist to promote social and charitable causes rather than
generating profits.
- Limited Liability: The liability of
its members is limited to their shareholding.
- Separate Legal Entity: It enjoys a
distinct legal identity, allowing it to own property, incur debts, and
enter into contracts independently.
- Perpetual Succession: The company’s
existence is unaffected by changes in membership or leadership.
- No Minimum Share
Capital: Unlike other companies, Section 8 Companies do
not require a minimum share capital.
- Tax Benefits: These companies
often enjoy tax exemptions under the Income Tax Act, 1961, subject to
compliance with prescribed regulations.
- Name Usage: Section 8
Companies do not need to use “Private Limited” or “Limited” in their name.
Advantages of a
Section 8 Company
- Tax Exemptions: Significant tax benefits
are available under the Income Tax Act for non-profit entities.
- Credibility: Being licensed by the
Central Government enhances the credibility and trustworthiness of the
organization.
- Funding Opportunities: Easier access to grants
and donations from government bodies, corporate entities, and
international organizations.
- Limited Liability Protection: Members’ personal assets
are protected against company liabilities.
- Legal Exemptions: Exemptions from certain
procedural and compliance requirements under the Companies Act.
- No Stamp Duty: Exemption from stamp duty
for incorporation documents.
- Perpetual Existence: The company continues to
operate irrespective of changes in its membership.
- Professional Management: Structured operations with
a formal board of directors enhance efficiency and governance.