OVERVIEW

Companies created for the public interest only, that is, for not making any profit, fall under section 8 of the Companies Act 2013. These companies are popularly known as Section 8 Companies or Non-Profit making companies. According to Companies Act 2013, the major aim of these companies is to promote research, social welfare, religion, charity, commerce, art, science, sports, education, and the protection of the environment or any such object. The main point is if any gain is earned, from the conduct of the company,  even then it is not possible to give to its  shareholders. However, profit gained can be used for advertisement of their social or public work. The concept of section 8 companies is just like Non-Governmental Organisations (NGO) or trusts but the unique disagreement is that section 8 companies are regulated by the Ministry of Corporate Affairs, on the other hand, NGOs and trust are governed by local state regulations which may vary from state to state. The purpose of forming section 8 companies in place of NGOs and trusts is that sponsors and the government largely place trustworthiness on companies. 

Major features/benefits of section 8 companies are as follows:

1. These companies are created for public interest or advantage only, that is for not making any profit, and fall under section 8 of the Companies Act 2013. The major aim of these companies is to promote research, social welfare, religion, charity, commerce, art, science, sports, education, and the protection of the environment or any such object.
2. There is no requirement of minimum capital in section 8 companies. It means it can be started with minimal capital.
3. These companies are permitted by the ministry for public interest. Therefore, it is easy for companies to raise contributions from people to conduct specified work for society with the objective of not making any profit.
4. There should be at least 2 shareholders. 
5. There should be at least 2 directors. Shareholders can also be appointed as directors of the company.   
6. The concept of maximum numbers of directors is not applicable in the case of Section 8 companies. This means any number of directors can be appointed in section 8 companies (but minimum 2). 
7. All directors of section 8 companies cannot be foreign residents. There must be at least one director Indian resident.
8. Just like Private Limited Companies, section 8 companies also enjoy the privilege of limited liabilities. In case of any loss or damage, shareholders are only liable for up to the number of shares acquired.
9. In the case of section 8 companies, there is relaxation given by the Government in payment of stamp duty as compared to Private Limited Companies. 
10. The substantial benefit of a section 8 company is that it is exempt from using any suffix like Private Limited, Limited Liability Partnership etc. 
11. There is an option available with section 8 companies that can apply for section 12A of Income Tax Act, which provides exemptions from paying income tax for people who are engaged in providing services to charities and the public interest. Therefore, after getting a certificate of section 12A of the Income Tax Act, section 8 companies can enjoy the benefit of income tax exemption. 
12. Section 8 companies can easily transfer their shares from one member to another. 

DOCUMENTS REQUIRED FOR STARTING SECTION 8 COMPANY

1. The following documents are required in relation to persons who are to be appointed as directors of the Company

• Passport size photo of all directors.
• PAN card copy of all directors.
• Current period bank statement/electricity bill/telephone bill/gas bill/mobile bill.
• Copy of aadhar/voter ID card.
• Email ID and phone number of each director. 

IT IS TO BE NOTED THAT ALL ABOVE DOCUMENTS MUST BE SELF ATTACHED.  

2. Address Proof for registered office must be one of the following:

• If premises is owned then,  A) Copy of Rent Agreement, B) Latest Electricity Bill C) No objection Certificate from the land Lord. 

3. If the Property is owned then any latest electricity bill alongwith NOC in favour of Proposed Company.