A section 8 Company is a company whose main objective is to promote fields such as arts, science, commerce, sports, education, religion, charity or such other objectives, uses the profits it generates for the advancement of its objectives, and does not pay dividends to its members. In simple terms, it is a company that is not in the business of making money. An individual or association of individuals can form a Section 8 Company. A Section 8 company must have a minimum of two members.
There are certain steps that are needed to be followed to set up a section8 company. Section8 companies can only be formed when all those interested in setting up one have fulfilled these steps.
The steps are as follows:
- In order to set up a company, one must first take a Digital Signature certificate for all the directors.
- In the second step, all directors must obtain director identification numbers.
- The third step is to obtain name approval from the Registrar of Companies (ROC).
- Fourth, an application should be submitted to ROC for a license.
- To obtain an incorporation certificate, Forms must be filed after obtaining a license from the ROC.
The following steps must be followed by everyone involved in the formation of section 8 of a company:
1) Minimum of two people is required for the registration of the section 8 company.
2) Obtaining the digital signature certificate (DSC) for proposed directors not having directors identification number (DIN).
3) Obtaining directors identification number from the ministry of corporate affairs by filling in the form.
4) Filling of the form inc-1 for the reservation of the name we want.
5) Post approval of name from the concerned registrar of the companies.
Setting up a section 8 company has many advantages, and a corporation can benefit from all of those benefits.
Some of the advantages are as follows:
1) Tax benefit
2) Share capital
3) No need to use title
4) Ownership transfer
As a result of the Companies Act and other laws, Section 8 companies are entitled to a variety of exemptions and benefits. Unlike various corporate societies and trusts, a company is governed by a central law, as opposed to the many corporate societies and trusts.