MEANING:
A Section 8 Company is a type of organization registered under the Companies Act, 2013 as a Non-Profit Organization (NPO) or Non-Governmental Organization (NGO). Its primary objective is to promote activities such as arts, commerce, education, charity, environmental protection, sports, science, research, social welfare, and religion. Unlike profit-driven entities, a Section 8 Company is required to utilize its earnings and surplus solely for achieving its charitable objectives, in accordance with Section 8(1)(a), (b), and (c) of the Companies Act, 2013.
ADVANTAGES:
- Limited Liability – Members are only responsible for the company’s obligations up to the amount of their investment, protecting personal assets.
- Separate Legal Entity – The company exists independently of its members, can own property, enter contracts, and sue or be sued in its own name.
- Tax Benefits – Eligible for tax exemptions under the Income Tax Act, and donations made to the organization may qualify for deductions under Section 80G.
- Enhanced Credibility – Registration under Section 8 signals compliance with legal standards, building trust with donors and stakeholders.
- No Minimum Capital Requirement -Unlike private companies, there is no minimum capital needed to register a Section 8 Company.
- Perpetual Succession – The company continues to exist regardless of changes in management or membership, ensuring continuity in operations.