Section-8 Company- It is basically a non-profit making company, incorporated mainly for welfare purposes such as promoting education, eradication of poverty and so on. Previously it is defined as section-25 Company but with the commencement of Companies Act, 2013 the same falls under section-8 and known as section-8 Company. To form a Non-profit organization one can choose any one of the following routes i.e. Trust, Societies, Section-8 Company. Such company can not declare dividend to its members and it is the responsibility of the company to ensure that profits of the company utilize only for promotion its objectives.
We all are familiar with the incorporation process of private company, public company, once person company & Nidhi company but have less knowledge about section-8. To grab, the full information regarding such company we have to go through the following question;
Feature of section-8 Company
There is confusion amongst the investor regarding section-8 company to clear all the doubts it is necessary to know whole about this company. It is a non-profit making company, mainly to promote welfare in the country.
The incorporation process is divided into 3 steps;
- Name Approval- Application is filled to ROC via form INC-1.
- Application to ROC for grant of license under section-8- Within 60 days from the date of filling application regarding name approval, application is to be file to ROC to grant of license via form INC-12.
- Filling Incorporation documents- After obtaining license, the incorporation process starts by filling various forms.
How to form Section-8 Company
The process of registration of section-8 company is little bit complex, as the approval of central government required to registered the same.
Advantages for having a section-8 company
The main advantages of section-8 Company is that it can be registered as private company or public company without using the word limited or private limited at the end of its name. The number of members varies according to the nature of such company i.e. if such company formed as private limited company minimum 2 members required and in case of public company 7 members required.
Main objects of section-8 Company
These companies are formed only to promote art, commerce, science, sports, education, research, social welfare, religion, charity, protection of environment or any such object related to the same.