What is Section 8 Company
A non-profit organization is often known as NGO. An NGO can register under Trust Act. Or under Section 8 companies act, 2013 (earlier Section 25 of Companies Act 1956). The NGO can be registered for promoting art, science, commerce, Technology, sports, education, social research, social welfare, religion, charity and protection of environment etc.
A Section 8 Company has similar features to a Trust or Society expect, a section 8 Company is registered with the Ministry of Corporate Affairs. NGO/Trusts and Societies are registered under the State laws. Section- 8 Company is recommended for the big operation sizes like for opening of the university, College, School, research center, Sports Academy and technical college etc.
Anyone can register a Non-Profit Organization in the form of a Company registered under Section 8 of Companies Act, 2013. Such companies are incorporated under Section 8 with main objects of promotion of science, art, education, health, sports, environment, research or any other charitable and welfare objective. In India Non-Profit Organizations can also be registered as a trust or a Society. However a NGO registered as a section 8 Company has some added advantages. If the scale of operations of your planned organization is on the larger side then it is recommended to register a section 8 Company.
Basics Features of a Section 8 Companies
Section 8 companies are required to be incorporated with nonprofit objectives. Any profit earned through running a section 8 company will not be distributed among its members. It will either be reinvested in the business or utilized with an objective of furtherance of its main objects i.e. charitable purpose.
In order to start a Section 8 company, the following criteria should be met:-
- A Section 8 Company is a company to be incorporated by the Ministry of Corporate Affairs. Minimum two directors and two members are required to incorporate it.
- No minimum share capital is required for registration of a section 8 company.