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Section 8 can be defined as those companies whose main objective of incorporation is promoting art, science, sports, education, research, social welfare, religion, charity as well as protection of the environment or any other such object. The profit earned by these companies can be utilized only for the purpose of promoting the object of the company for which it is incorporated.
These types of companies do not have the right to pay a dividend to its members. These type of companies have improved legal recognition and a separate legal standing. Section 8 company’s work in a similar way as a Public Limited Company does, but it cannot use the word limited or Section 8 in its name.
These Companies are registered under the Central Government Regulations.
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As per the requirement of the Companies Act, there is no minimum capital that is required to start the company. After the incorporation also the capital can be increased accordingly.
Any person who is wishing to become the director should fulfill the following criteria:
Section-8 Companies can be incorporated as a Public Limited Company or a Private Limited Company. If the Section 8 Company is incorporated as a Public Limited Company then in that case minimum 3 directors are required and if it is incorporated as a Public Limited Company then minimum 2 number of directors is required.
Such companies are incorporated with the motive of non-profit and the profit earned from running these companies are utilized for the purpose of promoting the objective of the company the profit cannot be used for any other purpose. In simple words, the company is formed only for the charitable purpose.
Normally it takes around 35-45 working days for incorporating this Company. This time limit can also be reduced accordingly if the Regional Director approves the application early.
Note: In case of NRI all the documents should be notarized and passport of the applicant is compulsory.
Read our article:Section-8 Company Registration Procedure Online
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