Section 8 of the Companies Act, 2013 is a special provision that allows for the incorporation of companies dedicated to charitable and social objectives rather than profit-making. Such companies are formed to promote activities like education, art, science, sports, environment, social welfare, and research. The unique aspect of a Section 8 company is that it applies its income and surplus solely towards achieving its objectives and is strictly prohibited from paying dividends to its members. This ensures that funds are reinvested for the greater good, maintaining the non-profit nature of the entity.

The legal framework for Section 8 companies is clearly defined under Section 8(1)–(11) of the Companies Act, 2013, which sets conditions for incorporation, governance, and restrictions on profit distribution. Additionally, the procedural aspects are governed by Rules 19–23 of the Companies (Incorporation) Rules, 2014, which outline the requirements for licensing, conversion, and compliance, thereby ensuring transparency and accountability.

In this article, CA Manish Mishra talks about Section 8 Company Registration: Process, Benefits, and Documents.

Legal Framework

Section 8(1)–(3): Licence for Charitable Companies and Prohibition on Dividend Distribution

• These provisions empower the Central Government to grant a licence to companies that are formed for promoting charitable purposes such as education, art, science, sports, environment, research, or social welfare.

• Once the licence is granted, the company is recognised as a Section 8 Company, which allows it to function without the suffix “Limited” or “Private Limited” in its name.

• The most important aspect here is the bar on dividend distribution. All profits, income, and surpluses must be ploughed back into the company’s objectives. This ensures that the company’s resources are used exclusively for public benefit and not for enriching members or shareholders.

Section 8(4): Restrictions on Alteration of MoA and AoA

• Under this provision, a Section 8 Company cannot amend its Memorandum of Association (MoA) or Articles of Association (AoA) without prior approval from the Central Government.

• This safeguard prevents organisations from altering their original charitable objectives after incorporation. For example, a company registered for education cannot later amend its objects to shift into profit-driven businesses without government scrutiny.

• This provision ensures that the licence granted for charitable purposes is not misused and that the integrity of the company’s original mission is preserved.

Section 8(5)–(7): Revocation, Dissolution, and Transfer of Assets

• These subsections give the Central Government power to revoke the licence if a Section 8 company violates any conditions of its incorporation, indulges in fraudulent practices, or works against its stated objects.

• In case of dissolution or winding up, the law mandates that any remaining assets of the company, after settlement of debts, must be transferred to another Section 8 company or another entity with similar objectives.

• This ensures that assets accumulated for charitable purposes remain within the non-profit ecosystem and are not diverted for personal or commercial gain.

Rules 19–23 of the Companies (Incorporation) Rules, 2014

• Rule 19: Specifies the procedure for obtaining a fresh licence to incorporate a new Section 8 Company. It requires submission of draft MoA (INC-13), draft AoA, declarations (INC-14 & INC-15), projected financials, and a note on proposed activities.

• Rule 20: Deals with the conversion of an existing registered company into a Section 8 Company. This requires approval of the Regional Director and alteration of its MoA and AoA to embed non-profit restrictions.

• Rule 21–23: Lay down the process for conversion of a Section 8 Company into another kind of company (like private or public). Such conversion is heavily regulated, requiring approval from the Regional Director, creditors, and transfer of all accumulated assets to another Section 8 entity.

• Together, these rules operationalise the licensing and conversion mechanisms under Section 8 of the Act.

Recent MCA Updates: Integration of Licence into SPICe+ (Part B)

• Earlier, applicants had to file Form INC-12 separately to obtain a Section 8 licence before moving ahead with incorporation.

• However, with the MCA V3 Portal updates, the application for a Section 8 licence has been integrated into SPICe+ (Part B).

• This means that applicants now apply for incorporation and licence in one consolidated process, which saves time, reduces paperwork, and streamlines the scrutiny process by the Registrar of Companies.

• This update reflects the government’s push towards ease of doing business and digital governance in the corporate regulatory framework.

Eligibility and Conditions

For incorporation under Section 8, the following key conditions must be satisfied:

Charitable or Social Objectives

A Section 8 Company must be formed with a primary purpose of promoting charitable or socially beneficial activities. These include the promotion of education, art, science, sports, social welfare, environment protection, research, religion, or similar objects. Unlike commercial entities, the central idea is to serve public welfare rather than generate profits. The objects clause in the Memorandum of Association (MoA) must clearly reflect these charitable purposes, as this becomes the basis for the licence approval.

Utilisation of Profits and Income

The law requires that all profits, income, and surpluses generated by the company must be reinvested into its objects. For example, if a Section 8 Company generates income through training programs or grants, that income cannot be diverted to personal use by its members. Instead, it must be utilised for expanding the charitable activities, funding projects, or furthering its stated mission. This ensures that resources remain dedicated to the company’s cause.

Prohibition on Dividend Distribution

One of the defining features of Section 8 Companies is the absolute prohibition on dividend distribution. Unlike private or public companies where profits can be shared with shareholders, Section 8 companies cannot distribute any part of their income or surplus to members. This restriction is legally binding under Section 8(1)(b) and guarantees that funds are channelled solely towards charitable work, thereby maintaining the company’s non-profit character.

Transfer of Assets on Winding Up

If a Section 8 Company is dissolved or wound up, the remaining assets cannot be distributed among its members. Instead, after paying off liabilities, the residual assets must be transferred to another Section 8 Company or an organisation with similar charitable objectives, as directed by the National Company Law Tribunal (NCLT) or Central Government. This “asset lock” principle ensures that wealth accumulated under the banner of charity continues to serve the public interest even after the company ceases to exist.

Registration Process for a Section 8 Company

Name Reservation (SPICe+ Part A)

The first step in incorporating a Section 8 Company is reserving a unique name through the MCA’s SPICe+ Part A form. The proposed name must align with the company’s charitable objectives, such as promoting education, social welfare, or research. To reflect its non-profit character, suffixes like “Foundation,” “Association,” “Institute,” or “Federation” are recommended. Unlike private or public companies, Section 8 Companies are exempted from using “Limited” or “Private Limited” in their names once the licence is granted. The MCA scrutinises the name to ensure it does not conflict with existing entities or trademarks.

Filing of SPICe+ (Part B)

After name approval, applicants move to SPICe+ Part B, which captures all core details of the proposed company. This includes information on the registered office, directors, subscribers, capital or guarantee structure, and detailed object clause. The most crucial part is that the application for the Section 8 licence is integrated here, unlike earlier when Form INC-12 was filed separately. The form ensures that the company’s purpose, governance, and legal structure are documented, forming the backbone of incorporation. Any errors at this stage can lead to delays in approval by the Registrar of Companies (RoC).

Filing Linked Forms

Alongside SPICe+ Part B, three linked forms are compulsory:

• e-MoA (INC-13): Outlines the Memorandum of Association with clear mention of charitable objects like education, environment, or social welfare.

• e-AoA (INC-31): Contains the Articles of Association setting governance rules, director powers, and membership restrictions.

• AGILE-PRO-S (INC-35): Enables multi-registration for GST, EPFO, ESIC, Profession Tax, and a bank account.
  Together, these forms ensure legal validity, internal governance, and regulatory compliance of the Section 8 Company, reducing the need for multiple post-incorporation filings.

Attachments and Declarations

Several key documents must accompany the application:

• INC-14: Declaration from a professional (CA/CS/CMA/Advocate) confirming compliance with Section 8 provisions.

• INC-15: Declaration from each applicant affirming authenticity of submissions.

• Projected Income & Expenditure Statement for three years showing financial feasibility.

• Note on Proposed Activities detailing the charitable or social projects planned.

• Registered Office Proof, NOC from owner, and identity/address proofs of all subscribers and directors.
  These attachments provide credibility, transparency, and evidence of genuine intent, which are mandatory before the MCA grants the licence.

Scrutiny and Approval

Once all forms and attachments are submitted, the Registrar of Companies (RoC) conducts a thorough examination. The scrutiny includes verifying whether the proposed objectives align with Section 8 requirements, ensuring financial projections are realistic, and reviewing declarations for compliance. If deficiencies are found, resubmissions or clarifications may be required. Upon satisfaction, the RoC issues the Certificate of Incorporation along with the Section 8 Licence. This certificate legally recognises the company as a non-profit organisation and permits it to operate without the suffix “Limited/Private Limited,” safeguarding its charitable character under law.

Documents Required

Draft Memorandum of Association (MoA) – INC-13

The MoA is the charter document of the company that defines its scope and purpose. For Section 8 Companies, the MoA must clearly state the charitable or social objectives, such as education, environment, or social welfare. Since the licence is granted based on these objectives, drafting the MoA precisely and in alignment with Section 8(1) is critical.

Draft Articles of Association (AoA) – INC-31

The AoA governs internal management and lays down the rules for decision-making, director powers, membership conditions, and meetings. In a Section 8 Company, the AoA must include specific clauses prohibiting dividend distribution, regulating use of funds, and ensuring compliance with licence conditions under Section 8(4).

Declarations in INC-14 and INC-15

• INC-14: A declaration given by a professional (CA/CS/CMA/Advocate) certifying that the incorporation complies with all provisions of the Companies Act, 2013 and rules.

• INC-15: A declaration signed by each applicant (promoter/subscriber) affirming that the documents and statements submitted are true and that the company will abide by Section 8 restrictions.

Identity & Address Proofs of Subscribers/Directors

Each subscriber and proposed director must provide valid identity proof (PAN, Passport, Voter ID, or Driving Licence) and address proof (Aadhaar, Utility Bill, or Bank Statement). These documents establish the authenticity of stakeholders and are verified by the MCA to prevent fraudulent incorporations.

Proof of Registered Office

The company must furnish evidence of its registered office address. This can be:

• A Rent Agreement with NOC (if the premises are rented), or

• Ownership documents (if the premises are owned).
  This ensures that the MCA can communicate with the company at a verifiable physical location.

Financial Projections for Three Years

Applicants must submit a projected income and expenditure statement for at least three years. These projections demonstrate the financial feasibility of the proposed activities and assure the authorities that the company has a sustainable plan for fulfilling its charitable objectives without diverting funds for personal gain.

Note on Proposed Activities and Objects

A detailed note outlining the nature of activities, programs, or services the company intends to undertake is required. This note helps the Registrar evaluate whether the proposed operations align with Section 8 objectives and whether they genuinely serve public interest.

Benefits of Section 8 Company

Legal Status

A Section 8 Company enjoys the same recognition as any other corporate entity registered under the Companies Act, 2013. It provides its members with limited liability protection, meaning their personal assets are safeguarded against company liabilities. This legal status also enables the company to enter into contracts, own assets, and sue or be sued in its own name.

Exemptions

Section 8 Companies are entitled to tax exemptions under the Income Tax Act, 1961. Specifically, registration under Sections 12AA/12AB allows exemption on surplus income, while approval under Section 80G enables donors to claim deductions on their contributions. These exemptions significantly reduce the financial burden and incentivise donations, making fundraising easier.

Credibility

Since Section 8 Companies are licensed by the Central Government and strictly monitored by the Ministry of Corporate Affairs (MCA), they enjoy high credibility. Donors, CSR contributors, and even international funding agencies prefer them over societies or trusts, as their compliance framework ensures transparency, accountability, and good governance.

No Minimum Capital Requirement

Unlike a private limited or public limited company, Section 8 Companies have no statutory minimum capital requirement. This means they can be registered with any reasonable capital base, making them highly accessible to individuals or groups with limited resources but a strong intent to pursue charitable activities.

Separate Legal Entity

A Section 8 Company is a distinct legal entity from its members, ensuring perpetual succession. Even if directors or members change over time, the company continues to exist. It can own property in its own name, enter into agreements, and operate independently, ensuring continuity and stability in its charitable mission.

Post-Incorporation Compliance

Maintain Books of Accounts and Statutory Registers

After incorporation, a Section 8 Company must maintain proper books of accounts reflecting all income, expenditure, grants, and donations. It is also mandatory to keep statutory registers such as Register of Members, Register of Directors, and Register of Charges. These records ensure transparency and allow authorities or donors to verify financial discipline.

File Annual Returns (Form MGT-7) and Financial Statements (Form AOC-4)

Every Section 8 Company must file annual returns in Form MGT-7 and financial statements in Form AOC-4 with the Registrar of Companies. These filings disclose governance details, board structure, shareholding (if any), and audited financials. They are crucial for demonstrating compliance and accountability under the Companies Act, 2013.

Filing of CSR-2 (Where Applicable)

If a Section 8 Company itself meets the thresholds under Section 135 of the Companies Act, 2013, or acts as an implementing agency for CSR funds, it must file Form CSR-2. This form reports CSR spending, projects undertaken, and impact assessment. The MCA closely monitors CSR compliance to ensure funds are utilised for genuine social initiatives.

Board Meetings and General Meetings

Even as a not-for-profit entity, a Section 8 Company must conduct Board Meetings and General Meetings in accordance with the Act. This includes at least four board meetings in a year and one annual general meeting (if applicable). Proper notice, agenda, and minutes must be maintained to comply with corporate governance standards.

Alteration of MoA or AoA (Section 8(4))

Unlike other companies, a Section 8 Company cannot alter its Memorandum of Association (MoA) or Articles of Association (AoA) without prior Central Government approval. This safeguard ensures that the company does not deviate from its original charitable objectives. Any amendment requires formal application and approval before implementation.

Conversion and Winding Up

Conversion of an Existing Company into Section 8 (Rule 20)

An already registered private or public company can be converted into a Section 8 Company if its promoters decide to pursue charitable or non-profit objectives. As per Rule 20 of the Companies (Incorporation) Rules, 2014, this conversion requires:

• Passing a special resolution by shareholders.

• Filing an application with the Regional Director (RD) along with necessary documents like altered MoA, AoA, declarations, and financial records.

• Approval from the RD, who ensures the company’s new objectives are genuinely charitable.
  This process safeguards against misuse by profit-oriented companies trying to exploit Section 8 benefits.

Conversion of a Section 8 Company into Another Kind of Company (Rules 21–23)

The reverse process changing a Section 8 Company into a regular private or public company is highly restricted. Under Rules 21 to 23, such conversion requires:

• Prior approval of the Regional Director, ensuring public interest is not harmed.

• Obtaining consent from creditors, members, and relevant authorities.

• Mandatory transfer of all accumulated assets, grants, or donations to another Section 8 Company with similar objectives before conversion.
  This ensures that charitable funds cannot be diverted into profit-making ventures, preserving the integrity of Section 8 operations.

Winding Up of a Section 8 Company

In case of voluntary closure or winding up ordered by the Tribunal, the assets of a Section 8 Company cannot be distributed among members. Instead, after paying debts and liabilities, the residual assets must be transferred to:

• Another Section 8 Company with similar objectives, or

• Any entity as directed by the Tribunal or Central Government.
  This principle of “asset lock” ensures that property and resources built for charitable purposes continue to serve public interest even after dissolution.

Recent Updates (2025)

Integration into V3 Portal

Earlier, promoters had to file Form INC-12 separately to apply for a Section 8 licence before moving ahead with incorporation. With the MCA V3 Portal upgrade, this process has been simplified. Now, all applications for Section 8 incorporation and licence are integrated into SPICe+ (Part B). This means incorporation and licence approval are handled in a single streamlined filing, saving time and reducing duplication of work. It reflects the government’s initiative to promote ease of doing business and improve efficiency in company registrations.

CSR-2 Filing Extended (FY 2023-24)

Section 8 Companies often act as implementing agencies for CSR contributions from other corporates. To strengthen compliance under Section 135 of the Companies Act, 2013, they must file Form CSR-2 detailing CSR projects, expenditure, and outcomes. For Financial Year 2023-24, the Ministry of Corporate Affairs (MCA) has extended the filing deadline up to 30 June 2025. This extension provides NGOs and Section 8 Companies additional time to finalise financial statements, reconcile CSR spends, and align reporting with corporate donors’ compliance timelines.

Form Migration under MCA V3 (Effective 14 July 2025)

With effect from 14 July 2025, the MCA has migrated several important forms from the older V2 portal to the new V3 portal. These include critical forms like SPICe+ and AGILE-PRO-S, which are directly used for Section 8 incorporation and post-incorporation registrations. The migration requires applicants to be cautious, as form layouts, attachment requirements, and digital validations may differ in V3. Practitioners and companies are advised to validate forms thoroughly before submission to avoid technical rejections or compliance delays during the transition phase.

Conclusion

Section 8 Companies represent one of the most reliable and professionally structured legal entities for NGOs and non-profit organisations in India. Their foundation lies in Section 8 of the Companies Act, 2013, backed by the Companies (Incorporation) Rules, 2014, which provide strict statutory safeguards. These provisions ensure that charitable objectives remain uncompromised, profits are reinvested into social causes, and assets are preserved for public benefit even in the event of winding up.

The recent integration of filings into the MCA V3 portal has further simplified the incorporation process, making compliance smoother and more transparent. Along with this, the availability of tax exemptions under the Income Tax Act, donor confidence, and global recognition add to their credibility. For organisations that aspire to pursue charitable work with a robust governance framework, Section 8 registration is the most preferred and sustainable option, combining social purpose with corporate accountability.

Frequently Asked Questions (FAQs)

Q1. What is a Section 8 Company under the Companies Act, 2013?

Ans. A Section 8 Company is a not-for-profit entity formed for charitable objectives such as education, art, science, sports, social welfare, or environmental protection. It applies its profits only towards these purposes and is prohibited from distributing dividends to members.

Q2. What are the key legal provisions governing Section 8 companies?

Ans. Section 8(1)–(11) of the Companies Act, 2013 along with Rules 19–23 of the Companies (Incorporation) Rules, 2014 govern the incorporation, conversion, and regulation of Section 8 companies in India.

Q3. What is the process to register a Section 8 Company in India?

Ans. The process involves reserving the company name via SPICe+ (Part A), filing SPICe+ (Part B) with e-MoA (INC-13) and e-AoA (INC-31), submitting declarations (INC-14 and INC-15), attaching income-expenditure projections, and completing AGILE-PRO-S for bank, GST, and other registrations.

Q4. What documents are required for Section 8 Company Registration?

Ans. Key documents include draft MoA and AoA, INC-14 declaration by a professional, INC-15 declaration by applicants, identity/address proofs of directors and subscribers, proof of registered office, and financial projections for three years.

Q5. What are the benefits of registering as a Section 8 Company?

Ans. Benefits include tax exemptions (under Sections 12AA and 80G of the Income Tax Act), credibility among donors, exemption from “Limited/Private Limited” suffix, separate legal entity status, and no minimum capital requirement.

Q6. Can a Section 8 Company convert into a private or public company?

Ans. Yes, but conversion is restricted. Rules 21–23 of the Companies (Incorporation) Rules, 2014 allow conversion only with Central Government approval, and assets must be transferred to another Section 8 company with similar objectives.

Q7. What are the compliance requirements for Section 8 Companies?

Ans. They must file annual returns (MGT-7), financial statements (AOC-4), and CSR-2 (if applicable), maintain statutory registers, conduct board/general meetings, and seek Central Government approval for changes to MoA/AoA.

Q8. How long does it take to register a Section 8 Company?

Ans. If all documents are accurate, registration can take 15–30 working days, depending on MCA approval timelines and resubmissions, if any.

Q9. Is there any minimum capital requirement for a Section 8 Company?

Ans. No, there is no statutory minimum capital requirement. The company can be registered with any reasonable capital/guarantee as per its proposed activities.

Q10. What recent updates affect Section 8 Company registration?

Ans. In 2025, MCA integrated licence applications into SPICe+ on the V3 portal, extended CSR-2 filing for FY 2023-24 till 30 June 2025, and migrated several forms to V3 effective 14 July 2025.