Incorporation of Section 8 Company (Non-profit organisation)

NGO section 8 company

Concept of non-profit making company 

The concept of non-profit making company is quite old in India. In erstwhile Companies Act, 1956 it was regulated by Section 25 and that is why it was popular as Section 25 Company. However in Companies Act 2013 provisions related to non-profit making company are given in Section 8 read with Rule 19 and 20 of Companies (Incorporation) Rules, 2014.  Such organization can be registered as trusts, societies, or as a non-profit company incorporated under Section 8 of the Companies Act, 2013.

This article is meant for providing information regarding the procedures and process for incorporation of a non-profit making company as given in Section 8 read with Rule 19 and 20 of Companies (Incorporation) Rules, 2014.

 

Meaning & Definition of non-profit making Company

Meaning of Non-profit making Company: A Non-profit making Company is a Company which:

  1. 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;
  2. intends to apply its profits, if any, or other income in promoting its objects; and
  3. intends to prohibit the payment of any dividend to its members.

 

non profit company

 

Formation of companies with charitable objects

As per section 8 of Companies Act 2013,where it is proved to the satisfaction of the Central Government(power delegated to ROC) that a person or an association of persons want to register themselves under section 8 as a limited company for the furtherance of above mentioned objects, the Central Government may, by licence issued in prescribed manner 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.

 

Checklist for Incorporation of Section 8 Company

  • Obtain Class II DSC of the Authorized Persons to sign E-Forms
  • Obtain Director Identification Number (DIN)
  • Name availability for proposed company (INC-1)
  • Preparation of Memorandum of Association and Articles of Association
  • License under section 8 for new companies with charitable object
  • Rest all the provisions related to incorporation of Non-Section 8 Company are applicable to this type of Company.

An existing non-section 8 company can also be converted to section 8 company by following the prescribed procedure of law.

For any queries related to incorporation please contact:

J. K. Gupta & Associates
257, Vardhaman City Center,
Gulabi Bagh Near Shakti Nagar Railway Under Bridge
New Delhi-110052
Phone No- 011-23654449/ +919810043622
Email Id:- [email protected]

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