Section 8 Company — Formation with Charitable Objectives
# Section 8 Company — Formation with Charitable Objectives
A Section 8 company is a company formed for promoting non-profit objectives. It enjoys the status of a limited company but is prohibited from distributing profits to members.
It intends to apply its profits (if any) or other income in promoting its objects;
It prohibits payment of dividend to members.
## 2. Registration Procedure
### a. Apply in Form SPICe+ (INC-32) with required fees.
### b. File:
MOA & AOA;
3-year financial estimates (projected income & expenditure);
A declaration by:
A professional (Advocate / CA / CMA / CS in practice), AND
A person making the application;
Stating that the MOA & AOA comply with Sec. 8 and that all legal requirements for registration under Sec. 8 have been met.
## 3. Privileges of a Section 8 Company
Privilege
Detail
Status
Same privileges and obligations as a limited company
General Meetings
Can be called with 14 days' notice (vs. 21 days for others)
Directors
Exempted from minimum number of directors and Independent Director requirements
Committees
No need to constitute Nomination/Remuneration committees
Membership
A partnership firm CAN be a member of a Sec. 8 company (an exception to the general rule)
Name
Need NOT use the suffix 'Limited' or 'Private Limited'
Liability
Members' liability is limited despite the absence of the name suffix
## 4. Alteration of MOA / AOA [Sec. 8(4)]
MOA alteration → requires prior permission of Central Government (RD).
AOA alteration → requires prior permission of Central Government (ROC).
> Both authorities exercise powers delegated by the Central Government.
Worked example
### Example 1
Example 1 — Eligible object: A group wishes to incorporate a company to run free coaching for underprivileged children. → Education + charity = eligible Sec. 8 objects.
### Example 2
Example 2 — Dividend prohibition: Sec. 8 company X Ltd earns surplus of ₹50 lakh. → It cannot distribute as dividend; must be applied to promotion of its objects.
### Example 3
Example 3 — Partnership as member: ABC Partnership Firm wishes to become a member of XYZ Foundation (Sec. 8). → Allowed — partnership firms can be members of Sec. 8 companies.
### Example 4
Example 4 — Meeting notice: A Sec. 8 company calls AGM with 14 days' notice. → Valid — special exemption from 21-day rule.
### Example 5
Example 5 — MOA alteration: XYZ Foundation wants to add a new object. → Needs prior approval of CG (delegated to Regional Director).
⚠️ Common exam mistakes
Forgetting that Sec. 8 companies are still limited companies — they just don't use the name suffix.
Believing Sec. 8 companies cannot earn profit — they can, but profits must be ploughed back into the objects.
Forgetting that a partnership firm can be a member of a Sec. 8 company (a rare exception).
Applying the 21-day general meeting rule — only 14 days' notice is required for Sec. 8 companies.
Confusing MOA alteration authority (RD) with AOA alteration authority (ROC).
Bare-Act text Sec. 8(1) to 8(4) · Companies Act, 2013 · click to expand
Sec. 8(1) — Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company — (a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; (b) intends to apply its profits, if any, or other income in promoting its objects; and (c) intends to prohibit the payment of any dividend to its members, the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, 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'.