# Section 8 Company (Non-Profit Company)

## Object of Formation

Section 8 deals with the formation of companies created to promote charitable objects, including:

Commerce, art, science, sports, education, research
Social welfare, religion, charity
Protection of environment
Any other such objects

These companies are also known as non-profit companies or charitable companies.

## Core Restrictions on a Section 8 Company

1. No dividend may be declared to its members.

2. Surplus must be applied solely in promoting the company's objects.

## Central Government's Power to Issue Licence

The Central Government may, by issuing a licence on prescribed conditions, register such a person/association as a company with limited liability without adding "Limited" or "Private Limited" to its name.
Powers have been delegated to the ROC, but the Central Government may revoke this delegation and exercise the powers itself in public interest.

## Privileges and General Position

On registration, the company enjoys the same privileges and obligations as a limited company.
A firm may be a member of a Section 8 company (a notable relaxation).

## Alteration of Memorandum / Articles

A Section 8 company cannot alter its memorandum or articles without the prior approval of the Central Government.

## Amalgamation Restriction

A Section 8 company can amalgamate only with another Section 8 company having similar objects.

## Application for Registration

Application filed in Form SPICe+ (INC-32) with prescribed fee.
Supporting documents:
(a) MOA in Form INC-13 and AOA in Form INC-31
(b) Estimate of future annual income and expenditure for next 3 years, with sources and objects
(c) Declaration by an Advocate / CA / CS / Cost Accountant in Form INC-14, and by each applicant in Form INC-15, confirming compliance with Section 8 and all rules.

## Conversion into Any Other Kind of Company (Rules 21 & 22)

A Section 8 company may convert into any other kind only after complying with:

### Procedural Steps

Step	Requirement
(a)	Pass a special resolution at a general meeting
(b)	Explanatory statement must give reasons for conversion
(c)	File application in Form INC-18 with Regional Director (RD) along with: certified copy of SR, notice + explanatory statement, proof of notice served to specified authorities
(d)	A copy of application + annexures also filed with ROC
(e)	Within 1 week of filing with RD, publish notice in Form INC-19 — once in vernacular newspaper, once in English newspaper, and on company's website
(f)	All financial statements and Annual Returns must be filed up to preceding F.Y. (with CA-certified financial statement if application is later than 3 months from F.Y. end, made up to a date not preceding 30 days of filing)
(g)	RD, on being satisfied, issues an order approving conversion with such terms/conditions as deemed fit
(h)	Before imposing conditions or rejecting, RD must give the company a reasonable opportunity of being heard
(i)	After RD approval, company convenes a general meeting, passes special resolution to amend MOA/AOA, and files with ROC (with declaration to adhere to RD's conditions)
(j)	ROC registers documents and issues a fresh Certificate of Incorporation

### Notice to Specified Authorities

Proof of notice must be served (by registered post or hand delivery) to:

Chief Commissioner of Income Tax having jurisdiction
Income Tax Officer having jurisdiction
Charity Commissioner
Chief Secretary of the State (where registered office is situated)
Any organisation/department of CG/SG/other authority under whose jurisdiction the company operates

These authorities may make representations to RD within 60 days of receiving the notice (after giving the company an opportunity).

## Revocation of Licence

The Central Government may, by order, revoke the licence if:

The company contravenes Section 8 requirements or licence conditions, OR
Affairs are conducted fraudulently, OR
Activities are violative of company's objects, OR
Activities are prejudicial to public interest.

Worked example

### Example 1

Example 1: A group of educationists wishes to form a non-profit company to promote scientific research. They apply in Form SPICe+ (INC-32) with INC-13 (MOA), INC-31 (AOA), 3-year income/expenditure estimate, and declarations in INC-14 and INC-15. CG grants licence. → Registered as a Section 8 company without "Limited" in its name.

### Example 2

Example 2: XYZ Section 8 Co. earns a surplus of ₹50 lakh in F.Y. 2023-24. The board proposes a 10% dividend to members. → Not permitted — Section 8 prohibits dividend; surplus must be reapplied to objects.

### Example 3

Example 3: ABC Section 8 Co. (object: promoting art) wishes to amalgamate with DEF Ltd, a commercial private company. → Not permitted — Section 8 company can amalgamate only with another Section 8 company having similar objects.

### Example 4

Example 4 (Conversion): PQR Section 8 Co. decides to convert into a private limited company. Steps: (i) special resolution + explanatory statement giving reasons; (ii) Form INC-18 with RD; (iii) copy with ROC; (iv) publish INC-19 notice within 1 week (vernacular + English newspapers + website); (v) ensure all financials/annual returns are filed; (vi) await RD's order; (vii) on approval, pass another SR to amend MOA/AOA; (viii) file with ROC; (ix) receive fresh COI.

### Example 5

Example 5 (Revocation): A Section 8 company is found to be diverting funds for the personal benefit of trustees. CG, after due process, revokes the licence under Section 8 — affairs conducted fraudulently / prejudicial to public interest.

⚠️ Common exam mistakes

Forgetting that a Section 8 company can amalgamate only with another Section 8 company having similar objects — not any company.
Believing a Section 8 company can declare dividends out of profits — strictly prohibited.
Confusing the forms: MOA is INC-13, AOA is INC-31, professional declaration is INC-14, applicant declaration is INC-15, conversion application is INC-18, public notice on conversion is INC-19.
Forgetting that firms can be members of a Section 8 company (unique relaxation).
Missing the prior Central Government approval required for any alteration of MOA/AOA.
Overlooking the 60-day window for specified authorities to make representations to RD on a conversion application.
Confusing the OPC and Section 8 restrictions: an OPC cannot be incorporated as or converted into a Section 8 company.
Forgetting that conversion of a Section 8 company requires TWO special resolutions — one before applying to RD (for conversion), one after RD approval (for MOA/AOA amendment).

Bare-Act text Section 8 read with Rules 19–22 of Chapter II · Companies Act, 2013 read with Companies (Incorporation) Rules, 2014 · click to expand

Section 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', and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.

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Section 8 Company (Non-Profit Company) - Formation, Restrictions, and Conversion

Worked example

⚠️ Common exam mistakes