Section 8 company (NGO)

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A company is referred to as Section 8 Company when it registered as a Non-Profit Organization (NPO) or Non-Governmental organizations (NGOs)

Section 8 company (NGO) - An Overview

A Section 8 company under the Companies Act, 2013 is an organization registered with an objective of promotion of arts, science, sports, education research, social welfare, religion, charity, protection of environment or any other such object. These are the limited companies established under the Companies Act. The Government grants these companies an exclusive license under Section 8 Companies Act.

Section 8 Company has more advantages in comparison to a trust and society. Its registration is governed by the Ministry of Corporate Affairs whereas the Trust & Society registration is governed by the registrar of state under the State Government.

For Section 8 Company, it is not required to use words ‘LTD’ or ‘PVT LTD’ in their name. With effect from June 5, 2015, under the act, there is no such requirement regarding the minimum capital.

Advantages Of Section 8 company (NGO)

Some of the advantages of registering a Section 8 Company are:

Tax Exemption:

Since, it is a non-profit organization; hence they are exempted from some provisions of the income tax. They are also given numerous other deductions and other tax benefits. They gain benefits under section 80G of the Income Tax Act, 1961. Also, they pay less stamp duty as compared to other organizations.

No requirement of title:

It need not include the terms “private limited” or “limited” as a suffix in the name of the Company.

Ease in Transferring Ownership:

Not like other businesses, where it is not possible to transfer ownership easily, for a Section 8 Company it is easier to leave the membership of Section 8 Company or to transfer its ownership.

Capital Flexibility:

Apart from the share capital of the Company, the necessary funds are brought in the form of donations, subscriptions from members or the general public.

Zero Stamp Duty

A Section 8 company do not have to pay stamp duty at the time of incorporation.

Minimum Compliances

Section 8 Company is required to do lesser legal formalities as compared to any other company. It gets special exemptions and privileges under the Companies Act, 2013. Therefore, in Section 8 Company, less number of compliances are required.

Documents Required for Section 8 company (NGO)

Two proposed names of Proposed Company.
Main Objectives of company
From Directors (2 Persons Minimum)
Copy of Identity proof (Aadhaar Card/Passport/Driving License/Voter Card)
Copy of Address Proof (Latest Bank statement/Electricity Bill/Telephone bill/Postpaid Mobile Bill)
Passport Size photograph
Mobile No. and Email ID.
Educational Qualification
Shareholding Details
For Registered office proof of the company

Frequently Asked Questions

Is there any maximum limit for the number of members in the Section 8 company?

There is no such maximum limit.

Can any government employees or officer be a member of NGO?

The answer to this question is yes. Government employees or officers can be part of NGOs provided the NGO is not anti-government. There are a few rules too that these people have to follow, one of them is to make sure that the NGO is not profit making and the member must not draw any salary from the NGO.

What are the other alternatives for starting an NGO?

The other alternatives are to start a Trust or a Society based on the objectives of your NGO.

How is the property of Section 8 managed?

The property of the company vests in the name of the Company and the same can be sold as per the rules mentioned under the Companies Act, (Eg: With the consent of the Board of Directors in the form of a resolution).