Why should you invest in a Section 8 Company?
The thing that you should know about section 8 companies - before thinking invest in a section 8 company (start a section 8 company)
If you are stressed about how Section 8 companies do business then you will surely get all of your answers in this blog…
Not all companies nowadays wish to make huge profits or even profits by carrying out the simple process of trade or commerce. Some companies have objectives of being charitable and generating zero profit. Search companies are known as Section 8 companies and are considered under Section 8 of the Companies Act 2013. These companies will likely allot all the income or profit towards charitable objectives.
Some Features of Section 8 Company:
Section 8 Company includes various components that not all companies enjoy.
Charitable Purpose:
Section 8 companies do not have any profit motive. The aim here is to be completely charitable. They support causes including cultural science, religion, sports, etc.
No minimum share capital
Unlike other generic companies, they have no prescription
Limited liability
Section 8 companies have only limited liability of the members. In any case, the punishment cannot be unlimited.
Government companies
They can work only if they have a license from the central government. In some cases, the government also has the right to revoke consent.
Privilege
Since companies have charitable objectives, the Companies Act provides them with several benefits and exemptions.
Companies as members
Apart from individuals and associations of persons, section 8 also allows companies to become members of these companies.
Formation of The Section 8 Company
Before doing business with a section 8 company, do some section 8 learning about the formation of this company. Then, you can apply to the Registrar of Companies using the required forms to form a company with charitable objects under section 8 of the Companies Act. It can be done either by an individual or with a collaboration of people. The Central Government will accept the application on being satisfied with the terms and conditions are given under the license.
Once received, the Registrar of Companies can register the company, provided you pay all the required amounts. You should also know that such companies can only be limited companies. Therefore, all the privileges and liabilities of limited companies apply to it as well. Also, you cannot add words like Private Limited or Limited in the name like other companies.
Since the existence of such companies is based only on the license granted by the Central Government, They cannot change the Articles of Union of the member India without the permission of the Central Government of India. If permission is not given, they cannot do anything.
Benefits of Section 8 Company
Tax privileges are immense as blockage companies can be exempted from paying income tax. Companies also get other benefits under section 83 of the Income Tax Act 1961. Donations made to Section 8 companies by corporations or individuals can claim tax exemption.
Under this section, the charitable organization also has to register for sections 80G and 12A of the Income Tax Act 1961 to avail of all exemptions and deductions. Apart from this, private, and public limited companies can also make donations to section 8 and contribute towards corporate social responsibility as per section 131 of the Companies Act 2013.
Source: Section 8 Company
0 Comments