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Section 8 Company : Laws Applicable to an NGO

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Divya Singhvi

NGO
PLC
public limited company
Section 8 Company
Last updated on May 5th, 2021

Section 8 Company is a Company Licensed u/s 8 of the Companies Act, 2013. The main purpose of establishing a section 8 company is to promote non-profit objectives. Many of these companies primarily have charitable and non-profit objectives. As a result, it is similar to a Trust or Society. In addition, it intends to apply its profits, if any, or other income in promoting its objects.

Therefore the main objectives of Company registered u/s 8 are:

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Laws applicable to an NGO in India

In India, you can register an NGO under any of the following Acts:

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Who Can Form Section 8 Company?

Benefits of Section 8 Company

FAQs

Can a Company with unlimited liabilities be registered as
a Section 8 Company?

No. Rule 20(1) of the Companies (Incorporation) Rules, 2014
provides that only a limited company registered under this Act or under any previous company law shall make an application to the Registrar for the issue of license. Therefore, a company with unlimited liabilities cannot be registered as a Company u/s 8.

Can Company registered u/s 8 issue redeemable preference shares?

There is restriction in section 8(1) for distribution of profits and payment of any dividend to its members. Therefore the company cannot issue  redeemable preference shares.

Which is more beneficial a trust or company u/s 8?

The cost factor involved in trusts are critically low as compared to a company registered u/s 8 of the Company’s Act. However the transparency in working is very low in trusts as compared to a Company u/s 8. As a result the grant of subsidies to trust is very less as compared to the company registered u/s 8.

Got Questions? Ask Away!

  1. Hello @Heer_Mandaliya

    In order to incorporate a Section-8 Company, following forms are required:

    1. SPICe+ Part A- To reserve name
    2. SPICe+ B- Application for Incorporation of Company, PAN and TAN
    3. AGILE PRO- Application for PF, ESI, GST (Optional), Bank account, Professional Tax (Only in Maharashtra)
    4. INC-9 An affidavit from each director and subscriber
    5. INC-13- Memorandum of Association
    6. INC-14- Articles of Association
    7. DIR-2- Consent to act as Director

    You can read more about provisions governing a Section-8 Company here:

    Hope this helps!