Section 8 company Registration

• A company registration under section 8 comes with numerous benefits, making it an optimal choice for charitable organizations.● Firstly, it earns higher credibility than other charities, which enhances donor trusts. This not only attracts more donors but also helps maintain long-standing relationships with existing ones.
• Moreover, a Section 8 company enjoys zero stamp duty on incorporation in India & is further exempted from registration costs, allowing it to save valuable resources that can go towards its core mission.
• Partnerships under this company can become members & obtain directorship, giving them a more active role in the organization.
• Effortless tax benefits under Section 12AA & 80G of the Income Tax Act provide greater financial efficiency for the company. A Section 8 company acquires a separate legal entity from its members, thus safeguarding against legal liabilities.
• Donors receive exemption under Section 80G if registered under the same section. Lastly, there is no obligation for minimum paid-up capital, providing flexibility in operations.

Section 8 companies are limited in their ability to raise funds by way of deposits. However, they are allowed to accept donations from the general public. These donations are typically used for the purpose of furthering the company's objectives, such as promoting social welfare or advancing education. It is important to note that Section 8 companies are subject to strict regulations & are required to maintain transparency & accountability in their financial practices. While they cannot accept deposits, these companies play an vital role in promoting social causes & making a positive impact on the world around us.

A foreign company cannot be registered under Section 8 of the Companies Act, 2013, as it does not fit within the definition of a foreign company as outlined in Section 2(42). It is essential that those looking to form a Section 8 company understand these limitations & eligibility requirements to avoid any potential legal issues down the line.

As far as taxation for Section 8 companies is concerned, they are treated like any other company. The profits generated by the company are taxed at a rate of 30%. However, if the section 8 company is registered under section 12AA of the Income Tax Act, then the profits are completely exempt from taxation. This means that if the company is following all the regulations & is registered under section 12AA along with being a Section 8 company, it can enjoy the perks of tax exemption.

For companies operating as Section 8 entities, the remuneration of directors can be a complex issue. When a company has only one managing director, whole-time director, or manager, their salary cannot exceed 5% of the net profits. However, if a company has multiple directors in these roles, the total remuneration cannot exceed 11% of the net profits. It's essential for companies to adhere to these guidelines, but it's equally important for directors to recognize their value & ensure they're being fairly compensated for their contributions.

There is no requirement for minimum paid-up capital in these cases. This is in contrast to other types of companies, where a minimum level of capital is necessary to get started. With a Section 8 company, the focus is on the social good the company can do, rather than just making a profit. Therefore, minimum capital requirements are not considered to be important for this type of entity.

Yes, as a separate legal entity, a Section 8 company has the right to acquire, own, & dispose of their properties in their own name. This means that the company can sell a property just like any other entity. It's always best to ensure that you're following all relevant laws & regulations when making these transactions.

While the Companies Act 2013 does prescribe a minimum of three members for public limited companies & two for private limited companies, there is no rule when it comes to Section 8 companies. In fact, there is no minimum or maximum number of members specified for these types of organizations. This can actually be a great advantage for those looking to establish a Section 8 company, as it provides ample flexibility in terms of membership & governance

Section 8 companies, in spite of their non-profit status, have the ability to make a profit. Rather than being focused solely on generating revenue, these organizations are formed to serve a public good, such as promoting the arts, science or charity. While some might believe that non-profit status restricts the potential for profit, Section 8 companies can & often do turn a profit while still fulfilling their intended purpose.