According to the Companies Act 2013, it is defined under Section 8 that “Company has its objective of
(a) promotion of commerce, art, science, sports, education, research, welfare, religion, charity, protection of environment or any such other object;
(b) Intends to use its profits, if any, or other income in promoting its objects; and
(c) intends to stop the payment of any dividend to its members, the Central Government may, by license issued in such manner as may be prescribed, and on such conditions as it deems fit, may allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.”
What are the features of Section 8 company?
The companies registered under section 8, cannot distribute profits or assets to its members.
The voting rights to the members of section 8 companies are on the basis of the number of shares, almost like that of other companies.
There is no minimum level of capital prescribed; hence a section 8 company is often incorporated with the capital as required by it.
It is necessary that at least one director of the company must be resident in India. A person is known to be a resident when he stays in India for at least 182 days in the FY.
What are the advantages of a Section 8 company?
Tax benefitsSeparate legal entityEase in transferring of ownership /titleZero stamp dutyMinimal share capitalExemption from names
What are the disadvantages of a Section 8 company?
No profit distribution
Zero benefits or perks
Various rules and regulations to be followed
One person in this company cannot make his own decision without the consent of others.
What is the registration process of Section 8 Company?
DIGITAL SIGNATURE OF DIRECTOR
As the application for Company Incorporation is filed online, the method starts with the issuance of Digital Signatures of class two.
NAME APPROVAL OF COMPANY
The Company name should not be similar to an existing company and it must be unique.
LICENSE FOR SECTION 8 COMPANY
Before the central government, an application must be filed for grant of license to register a company without Limited in their name.
INCORPORATION, PAN AND TAN
An application is made to the ROC office for incorporation of section 8 company, and allotment of PAN and TAN.