If you want to work for charity and the community, your company must be covered by Section 8 of the Companies Act 2013. With no minimum share capital, these businesses are primarily established for charitable purposes. To make it easier for you to make a decision, here are some additional details about this.
What is a Section 8 business?
With the intention of promoting education, art, commerce, and entertainment, a Section 8 company is established. It is a non-profit organization that aids in the growth of people from all walks of life.
What distinguishes a Section 8 company?
Founded for welfare purposes: The sole purpose of these businesses is social welfare. It was designed to investigate a community’s requirements.
No minimum investment: They don’t need as much money as other businesses do. It is up to its shareholders to decide. Capital is not constrained in any way.
The government has given its approval: All of their actions and transactions are authorized by the government.
Donations: Donations from individuals and organizations serve as their primary source of income.
The purpose of the earnings is: The amount acquired is used solely for the organization’s cause, in contrast to other businesses, where it is distributed among the organization’s members.
Suffixes are not required: They have the option of using or not using suffixes like “pvt ltd.”
Tax Exemption: Since they are not for profit organizations, they are exempt from paying taxes by 30%.
Stamp duty-free: The Memorandum of Association exempts them from paying stamp duty.
Easy transfer of ownership: Transferring ownership is a straightforward process.
Diminished capital: They require less share capital than public or private companies.
Status as a distinct entity: They won’t have any members of their own.
There is no profit share: The members do not share the profit. For the organization, it is used.
Government approval: The government must approve any changes to the Memorandum of Association beforehand.
Zero self-reliance: The Central Government’s rules must be followed.
restricted expenditures: Funds can only be used for the organization’s stated goals.
A license can be taken away: A company’s license can be revoked at any time by the central government.
Everything you need to know about a Section 8 company is now available to you. If you’re thinking about charity, this is the thing for you. However, if you want more options, check out our blog about trusts and societies.