A Section 8 company is a non-profit company licensed under Section 8 of the Companies Act, 2013. It must promote objects such as education, charity, social welfare, art, science, sports or environmental protection, apply all profits to those objects, and never pay dividends to its members. It is registered through the same SPICe+ form as any company, with a licence from the Central Government.
It is the most regulated of India's three main non-profit forms, which is exactly why CSR donors and institutions often prefer it. Below: what Section 8 requires, the restrictions that follow, and how it compares with a trust and a society.
Section 8 company at a glance
Point | Position |
|---|---|
Governing provision | Section 8, Companies Act, 2013 |
Purpose | Promoting charitable or public-benefit objects, not profit for members |
Profits | Applied only to the company's objects; no dividend to members |
Licence | Granted by the Central Government at incorporation through SPICe+ |
Minimum members | 2 for a private Section 8 company; 7 for a public one |
Minimum capital | None prescribed |
Name | Need not end with Limited; may use words such as Foundation, Forum, Association, Federation, Council |
On closure | Surplus assets go to another Section 8 company with similar objects, not to members |
What Section 8 of the Companies Act 2013 says
Section 8 lets the Central Government license a person or association as a company with limited liability, without Limited in its name, if it is formed to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or similar objects. Two conditions attach: profits and income go only towards those objects, and no dividend is paid to members.
Example: three doctors in Hisar want to run free diagnostic camps in nearby villages and accept CSR funding from local manufacturers. They register "Gramin Swasthya Foundation" as a Section 8 company. Donations and grants fund the camps, the directors can be paid reasonable remuneration for actual work, but no surplus is ever distributed to them as profit.
Restrictions a Section 8 company accepts
Restriction | What it means |
|---|---|
No dividend | Members receive no share of surplus, in any form |
Objects are locked | Changing the objects in the memorandum needs the Central Government's approval |
Licence can be revoked | If the company breaks the conditions or acts fraudulently, the licence can be cancelled and the company wound up or amalgamated |
Assets on closure | Transferred to another Section 8 company with similar objects, or as a tribunal orders |
Penalty for default | The company faces a penalty of ₹10 lakh to ₹1 crore; directors and officers in default ₹25,000 to ₹25 lakh |
A one person company cannot be formed as, or converted into, a Section 8 company.
Section 8 company vs trust vs society
Point | Section 8 company | Trust | Society |
|---|---|---|---|
Law | Companies Act, 2013 | Indian Trusts Act, 1882 or a state public trust law | Societies Registration Act, 1860 or a state law |
Regulator | Ministry of Corporate Affairs | Charity Commissioner or registrar, varying by state | State Registrar of Societies |
Minimum founders | 2 (private) | Typically 2 trustees | Usually 7 |
Management | Board of directors under company law | Trustees under the trust deed | Governing body under the bye-laws |
Transparency | Annual MCA filings, public record | Varies by state | Varies by state |
Credibility with CSR funders | Highest | Moderate | Moderate |
Our view: choose a Section 8 company when you plan to raise CSR funds, work across states, or want governance that institutional donors can check on the MCA record. A trust is simpler for a family-run charity with a fixed purpose, and a society suits a membership body such as an association or club.
How a Section 8 company is registered
Get DSCs for the proposed directors and subscribers.
Reserve the name in SPICe+ Part A, using a word such as Foundation or Association.
Draft the memorandum with the charitable objects and the no-dividend clause.
Prepare the declarations and estimated income and expenditure for the first three years.
File SPICe+ Part B with the linked forms; the licence and certificate issue together.
After incorporation, apply to the Income Tax Department for exemption and donor deduction registrations.
The core documents are the same as for any company; see documents required for company registration. MCA's SPICe+ FAQ lists the extra attachments for a Section 8 company.
Tax registrations come separately
Company registration does not by itself make income tax-exempt or let donors claim a deduction. Both need separate registration with the Income Tax Department after incorporation, and a Section 8 company that will receive foreign contributions also needs registration under the Foreign Contribution (Regulation) Act before accepting them.
Compliance after registration
A Section 8 company follows full company compliance: board meetings, an annual general meeting, audited financial statements, and the annual return and financial statement filings with the MCA. Our annual ROC filing team handles these.
Planning a foundation or NGO? Talk to our team about Section 8 company registration at ComplyLocal →
