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Section 8 Company

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A Section 8 company registration and incorporation can be done for the purpose of promoting commerce, art, science, religion, charity, or any other desirable object after getting permission from the central government. The license essentially allows the intended name to be changed to private Limited.


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What is a Section 8 Company?

Section 8 companies are ideal for non-profit purposes and can be either private or public limited companies. A minimum of two promoters is required by law if the proposed section 8 company is a private limited company. However, if the company is a public limited section 8 company, the promoters must be a minimum of seven people. A ‘Section 8 Company’ is entitled to various legal exemptions as well as a reduced rate of fees. The process of forming a section 8 company is similar to that of forming any other business in India, with the exception that a previous license from the central government is required under Section 8 of the Companies Act, 2013.

Characteristics of a Section 8 Company

One Resident Director

One of the company’s directors must be based in India. When a person spends at least 182 days in India during a fiscal year, he is considered a resident.

No Minimum Capital

Because there is no minimum capital requirement, a section 8 company can be formed with whatever capital it requires.

No Profit Motive

Profits or assets cannot be distributed to members of companies registered under Section 8 of the Companies Act.

Voting Rights

The voting rights to the members of section 8 company are based on the number of shares, similar to that of any other company.

Procedure for Starting a Section 8 Company

Documents Required

    • Two Photographs of Partners
    • PAN Card of each Partner
    • Identity Proof of each Partne
    • Address Proof of each Partner
    • Signed Declaration(s) from Directors

Need any further assistance with business compliances and filings?

Frequently Asked Questions

The name of a section 8 company shall not include Private Limited or Limited at the end of its name and must end with any of the below words

  • Foundation
  • Forum
  • Association
  • Federation
  • Chambers
  • Confederation
  • Council
  • Electoral Trust and the like etc.

Yes, Section 8 Companies are allowed to accept foreign direct investment as long as they follow FEMA regulations. The infusion of cash in a section 8 company, however, is a foreign contribution under the Foreign Contribution (Regulation) Act, 2010 [FCRA] and the Frequently Asked Questions (FAQ) on the ministry of home of the union government of India’s website. In other words, while FDI in section 8 companies is legal, it can only be injected with prior permission/registration from the central government because it is deemed a Foreign Contribution under the FCRA.

Yes, even if the investee company is a profit-making entity, there are no special restrictions on section 8 companies investing in other companies.

The minimal number of directors on the board of a section 8 company is two if it is incorporated as a private limited company, and three if it is incorporated as a public limited company.

A Section 8 company is formed with a physical address that will be declared as the new business’s registered office. The following is a list of documents that are admissible as verification of the location of the company’s registered office. The proof of the premises should be no more than two months old.

  • Electricity Bill
  • Gas Bill
  • Telephone Bill
  • Mobile Bill
  • NOC from the owner

Under section 12 of The Companies Act, 2013, a registered office must be declared at the time of company incorporation and maintained by the company, and it must be capable of receiving and recognising all communications and notices directed to it. Furthermore, the firm’s statutory records must be kept at the registered address of the company. As a result, having a registered address at a co-working space is not appropriate unless it is a secure location.

The funds are used by the Nidhi Company to lend to shareholders in accordance with Nidhi Rules. It gives money to businesses and individuals in the form of small loans.