As per the Companies Act, 2013, no association or partnership shall be formed, consisting of more than fifty persons for the purpose of carrying on any business that has for its objects the acquisition of gain by the association or partnership or by individual members thereof, unless it is registered as a company under the Act or is formed under any other law for the time being in force.

The Companies Act 2013 vide section 8 permits companies with charitable objects etc. to be registered without the words ‘Limited’ or ‘Private Limited’.

Exemptions to Section 8 Companies have been notified under Section 462 of Companies Act 2013 vide notification dated June 05, 2015.

Non- profit organisations (NPOs) can be :

• Societies registered under the Societies Registration Act 1860
• Trusts formed under Indian Trusts Act 1882
• Sectin 8 Companies under the Companies Act 2013

NPOs are in the concurrent list, hence both the Centre and the states can both regulate them. However, Section 8 companies are administered under section 8 of the Companies Act 2013.

Conditions for incorporation of a section 8 company:

• its objects includes promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;
• the company after incorporation intends to apply its profits, if any, or other income in promoting such objects only; and
• the company intends to prohibit the payment of any dividend to its members.

The term “person” is not defined under the Companies Act, 2013. Under General Clauses Act, “person” shall include any Company, or association or body  of individuals whether incorporated or not. Person can be natural or a legal person. By virtue of provisions of section 8(3), even a partnership firm can be a member of Section 8 Company.

To incorporate a Section 8 Company, an application shall be made to the Registrar of Companies via www.mca.gov.in along with an estimate of the future annual income and expenditure of the company for next three years, specifying the sources of the income and the objects of the expenditure.

As per rule 8(7) of the Companies (Incorporation) Rules) 2014, for the Companies under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust and the like etc.

Stamp duty on memorandum & articles of association of a Section 8 Company shall be governed by the State stamp laws.

A company registered under this section shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government.

A company registered under this section may convert itself into company of any other kind only after complying with such conditions as may be prescribed.

If on the winding up or dissolution of a company registered under this section, there remains, after the satisfaction of its debts and liabilities, any asset, they may be transferred to another company registered under this section and having similar objects, subject to such conditions as the Tribunal may impose, or may be sold and proceeds thereof credited to Insolvency and Bankruptcy Fund formed under section 224 of the Insolvency and Bankruptcy Code, 2016.

A company registered under this section shall amalgamate only with another company registered under this section and having similar objects.