Section 8 of the Companies Act, 2013 (“the Act”) permits the formation of a company for charitable or not-for-profit objects. The company must apply its profits or other income solely to promoting its objects, and it must prohibit the payment of any dividend to its members. The Section 8 company is the preferred vehicle for non-profit organisations, and it is subject to a distinct compliance regime.
The Objects and the Licence
The company must be formed for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object. The company must apply to the Central Government for a licence, and the licence is granted on the satisfaction of the conditions.
The Governance
The Section 8 company must have a board of directors, and it must comply with the provisions of the Act relating to the board meetings, the general meetings, the statutory registers, and the filings. The company cannot alter its memorandum or articles in a manner that conflicts with its objects without the prior approval of the Central Government.
The Compliance
The Section 8 company must file the annual return in Form MGT-7, the financial statements in Form AOC-4, and the other statutory returns. The company must also comply with the CSR requirements if it is covered by Section 135. The company's accounts must be audited by a chartered accountant, and the audit report must be filed with the ROC.
The Revocation
The Central Government can revoke the licence where the company contravenes the conditions or where its affairs are conducted in a manner that is not in accordance with its objects. The revocation is a serious step, and the company is given an opportunity to be heard.
Call to Action
Anuj Desai & Associates advises Section 8 companies on the compliance and governance regime—from the licence application and the objects to the annual filings and the conversion. If your Section 8 company needs assistance with its compliance, we can help.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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