1. What is Section 8 Company:

Section 8 Company is an organization registered as a Non-Profit Organization (NPO). NPO / company has the objective of promoting the arts, trade, charity, education, environmental protection, science, social welfare, sports, research, religion and intends to make use of its profits, if any, or other income in the promotion of its objects. It functions exactly as a limited company, including all the rights and obligations that come with such a company. However, it differs from a company in one very important aspect, i.e. it can not use the words "Section 8" or "Limited" in its name.

2. What's the MOA and the AOA?

MOA stands for the Memorandum of Association, whereas AOA stands for the Articles of Association. Both these documents serve as an important source of information for the various shareholders and other stakeholders associated with the Company.

MOA shall disclose the name, objectives, registered office address, limited liability clause, minimum paid-up capital and share capital of the Company. In short, it explains the relationship between a company and the outside world.

AOAs are the necessary documents to be provided when the company is incorporated with the Registrar of Companies (ROC). When AOAs are in conjunction with the MOA, they are called the Company's Constitution.

A Section 8 Company shall not make any changes to the provisions of its MoA & AoA without seeking approval from the Central Government first.

3. What are the Terms normally used for Section 8 Company Name?

• When selecting the name make sure that the name will reflect the purpose of the company.
• 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

4. Can Section 8 Company invest in another company or form subsidiary with the profit motive?

Yes, there is no specific restriction on investing in any other company by section 8 companies, even if the investment company is a profit-making entity.

5. Can a government servant, start his/her own Section 8 company?

Yes, yes. Government employees or officials may be part of NGOs, provided that the NGO is not anti-government. There are a few rules to be followed by these people, one of which is to ensure that the NGO does not make profits and that the member does not draw any salaries from the NGO.

6. Is an office required to open a Section 8 company?

No You can open a business to your home address There is no need to have a commercial place to open a company

For registered office Address, need these documents

• Rent agreement with the current rental receipt (in case the premises are rented)
• House tax receipts (in case the premises are owned)
• Power bill
• NOC from the owner (Format will be exchanged until the company name has been approved)

7. Can Section 8 Company raise capital through foreign direct investment (FDI)?

Yes, Foreign Direct Investment is permitted under Section 8 Companies subject to compliance with the FEMA Regulations. However, in the context of the Foreign Contribution (Regulation) Act, 2010 [FCRA] read with the Frequently Asked Questions (FAQ) on the website of the Ministry of Home Affairs of the Union Government of India, the capital injection of a company under section 8 is a foreign contribution. In simple terms, although FDI in section 8 companies is permissible, as it is considered to be a foreign contribution in terms of FCRA, it can only be infused with prior approval / registration by the central government.

8. Who can become a member in Section 8 Company?

Any individual/organization can become the member of Section 8 Company including foreigners/NRI’s.

9. What are the other alternatives for starting an NGO?

The other alternatives are to start a Trust or a Society based on the objectives of your NGO.

10. What is the difference between Directors and shareholders?

In simple words,

is the person who takes the responsibility to run the business and manages the day to day business of the company. Generally are the managers or agents of the actual owners of the company who act in fiduciary (trustworthy) position. Only individual persons can become directors.

are the owners of the company who invest their monies in the company. Shareholders get part in the profits of the company in the form of dividend. They aren’t responsible for the day-to-day management of the company, but they do have voting rights with which they can affect the decisions of the company. Any individual, company or other entity can become shareholder.

11. Who can form a Section 8 Company?

• Any person or association of persons (including a partnership firm)
• Any existing company
• One Person Company cannot be a Sec 8 Company (Rule 3(5))

12. What is the Eligibility Criteria for Incorporating a Section 8 Company Registration?

The main objects should ensure promotion of

– Commerce

– Art

– Science

– Sports

– Education

– Research

– Social Welfare

– Religion

– Charity

– Protection of Environment

– or any such other object

Intends to apply its profits, if any, or other income in promoting its objects

Intends to prohibit the payment of any dividend to its Members.

13. WHAT ARE THE KEY CONDITIONS FOR SECTION 8 COMPANY or Online NGO Registration:

• Profit or Income of the Company shall be applied for the promotion of the main object.
• Declaration of dividend or distribution of profit to the promoters is not allowed.
• No member shall be appointed as a remunerated officer.
• No remuneration / benefit shall be paid to a member being a servant / officer of the Company (except reimbursement of out of pocket expenses, reasonable interest on money lent or reasonable rent on the premises)
• Subsequent alteration of MoA & AoA requires prior approval of Central Govt. (i.e. ROC)