Section 8 Companies: Exemptions and Benefits

 Section 8 companies are non-profit companies registered under Section 8 of the Companies Act, 2013. They are formed for charitable, educational, religious, or other purposes beneficial to the general public. Section 8 companies are exempt from a number of regulations that apply to other companies, including:


  • Minimum paid-up share capital: Section 8 companies are not required to have a minimum paid-up share capital. This means that they can be formed with a small amount of money, making them more accessible to individuals and organizations with limited resources.
  • Number of directors: Section 8 companies can function with a minimum of two directors. This allows them to have a lean and efficient board structure, which can free up resources for their core mission.
  • Independent directors: Section 8 companies are not required to appoint independent directors. This can save time and money, and it also allows them to have a board of directors that is more aligned with their mission.

  • Committees: Section 8 companies are not required to form the following committees:

  1. Nomination and Remuneration Committee
  2. Stakeholders Relationship Committee
  3. Audit Committee

  • Annual general meeting (AGM): Section 8 companies can hold their AGMs at a date and time that is convenient for them. This gives them more flexibility and can help them to reduce costs.

In addition to these exemptions, Section 8 companies are also eligible for a number of benefits, including:


  • Tax exemption: Section 8 companies are exempt from income tax on income that is used for their charitable purposes.
  • Stamp duty exemption: Section 8 companies are exempt from stamp duty on the transfer of shares.
  • Increased credibility: Section 8 companies are often seen as more credible than for-profit companies. This can help them to raise funds and attract volunteers.

Section 8 companies can be a valuable tool for individuals and organizations that want to make a difference in the world. The exemptions and benefits available to these companies can help them to focus on their mission and achieve their goals.

Here are some specific examples of how Section 8 companies can use exemptions to their advantage:

  • A small community organization that provides food and shelter to the homeless can use the exemption from minimum paid-up share capital to start with a small amount of money. This can help them to quickly get up and running and start providing much-needed services.
  • A religious organization that wants to build a new temple can use the exemption from independent directors to have a board of directors that is more aligned with their mission. This can help them to ensure that the temple is built in accordance with their religious beliefs.
  • A nonprofit organization that provides educational scholarships to students can use the exemption from the requirement to form the Nomination and Remuneration Committee to save time and money. This can free up resources that can be used to provide more scholarships to students.
Location: Gurugram, Haryana, India

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