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What is Section 8 Company?

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A Section 8 Company is a non-profit organization established with the objective of promoting charitable activities, arts, science, education, sports, and other social causes. Unlike other companies, its profits are solely utilized to further these objectives and cannot be distributed among its members. Understanding the concept of a Section 8 Company, along with the required documentation and the incorporation process, is crucial for those looking to establish or engage with such an organization.

Benefits

Tax Exemption

Minimum Capital Requirement

Separate Legal Entity

Credibility

Title Restriction

Benefits of Opening a Section 8 Company in India

  • Tax Exemption: Eligible for 100% tax exemption under Section 12AA of the Income Tax Act as profits are used for charitable purposes.
  • Minimum Capital Requirement: Flexible capital structure without any no minimum requirement.
  • Separate Legal Entity: Recognized as a separate legal entity with perpetual existence, enhancing autonomy and credibility.
  • Credibility: Strict compliance framework boosts trust and reliability compared to NGOs and trusts.
  • Title Restriction: Freedom to choose a name without the need to include "Section 8" in it.

Eligibility Criteria for Incorporation of a Section 8 Company

  • Indian Nationality: Must be incorporated by an Indian citizen or a Hindu Undivided Family (HUF).

  • Minimum Director: At least one director is required.

  • Charitable Objectives: The primary goal must involve promoting art, science, sports, education, charity, or aiding lower-income groups.

Documents Required for Section 8 Company Incorporation:

  • 1. Articles of Association (AOA) and Memorandum of Association (MOA)
  • 2. Declaration by the first director(s) and subscriber(s)
  • 3. Proof of office address (utility bills such as electricity, water, or gas)
  • 4. Certificate of Incorporation (COI) of an overseas corporate body (if applicable)
  • 5. Resolution passed by the promoter company
  • 6. Consent of Nominee (INC-3)
  • 7. Residential and identity proof of nominees and subscribers
  • 8. Applicant’s identity and residential proof
  • 9. Digital Signature Certificate (DSC)
  • 10. Declaration for unregistered companies

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