Register a private limited company and the process has an end. You file, it is incorporated, and from that moment it simply exists. Nobody granted you permission to have it; you complied with a procedure and a company came into being. A section 8 company does not work that way. It exists because the Central Government issued a licence under section 8(1) of the Companies Act, 2013, permitting a company to be registered without the word Limited or Private Limited in its name — and the Act says that licence is granted on such conditions as it deems fit. Section 8(6) then allows the Government to revoke it, after giving the company a reasonable opportunity of being heard, and to direct that the suffix be added back. So the accurate mental model is not a company that happens to be charitable. It is a conditional permission attached to a corporate shell — and three of those conditions decide whether the form suits you at all. One: no dividend to members. Ever. There is no exception and the prohibition sits in your own memorandum. Paying somebody for work done is a separate matter and is permitted; taking profit is not. Two: you cannot change your objects by yourself. Section 8(4)(i) bars altering the memorandum or articles except with the previous approval of the Central Government. Which means a change of direction in year three is an application, not a board resolution. Three, and this is the one founders are told last: the door is one-way. Under section 8(9), surplus assets on winding up or dissolution go to another section 8 company with similar objects on conditions the Tribunal imposes, or are sold with the proceeds credited to the fund under section 269. Not to the members. Not to whoever put the money in. And under section 8(10) you may amalgamate only with another company of the same kind. Where we stop: we state no government fee, no timeline and no form number. We will not choose your objects, and we will not tell you what a founder may be paid. And we promise no licence and no tax exemption, because neither is ours to grant.
What this guide covers
Begin with the distinction the whole subject turns on, because almost every later surprise follows from missing it.
Companies are ordinarily incorporated. You satisfy requirements, the Registrar registers, and the company exists. Nobody has exercised a discretion in your favour; you met a specification.
A section 8 company additionally requires a licence. The Central Government must be satisfied of certain things and may then issue one, permitting registration as a limited company without the usual suffix in the name. The licence is the operative act. The incorporation follows it.
Which is why the certificate on the office wall is, on this one form, the less important of the two documents you hold.
It helps to see the contrast rather than assert it, so take the ordinary case for a moment.
A private limited company is a vehicle its shareholders own. They may take dividends out of it, sell their shares, alter its objects by their own resolution within the Act, convert it, merge it with anybody who will agree, and on winding up divide whatever is left between themselves after creditors are paid.
Six capabilities, and a section 8 company is restricted on five of them. That is not an accident of drafting. Each restriction is the price of the licence.
If you are weighing the forms seriously, our private limited company page sets the ordinary one out, with LLP and one person company covering the two lighter variants — and this page is best read as a list of what you give up against any of them, and why.
Worth being precise about, because the grant is narrower than people assume and the conditions are wider.
Section 8(1) allows the Central Government, where it is satisfied that a person or association of persons proposes to register a limited company with objects falling in the described fields — the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment and the like — and that it intends to apply its profits or other income in promoting those objects and prohibits the payment of any dividend to members, to issue a licence permitting registration without the word Limited or Private Limited.
Read what is actually being granted: permission to be a limited company without saying so in the name. That is the privilege. Everything else in the section is the condition attached to it.
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Six words in sub-section (1) that are easy to read past and that define the character of the whole form.
The licence is issued on such conditions as the Central Government deems fit. Not on the conditions set out in the section and no others. The statutory conditions are the floor.
In practice most licences are granted on the ordinary terms, and a founder will rarely encounter a bespoke condition. The point is structural rather than practical: you hold your status on terms somebody else sets, and that is a different relationship with the state from the one an ordinary company has.
It also explains why the licence is the document to keep. Its terms are your terms, and the day somebody asks on what basis the company holds its status, the answer is in that paper and nowhere else.
The visible consequence, and the one most people know about before they know anything else.
A section 8 company may be registered without Limited or Private Limited at the end of its name. So it reads as a foundation, a trust, an institute, a society — whatever the founders chose — with nothing in the name announcing that it is a company at all.
That is genuinely useful. An organisation doing charitable work does not especially want the trading suffix on its letterhead, and the licence removes it.
One practical consequence worth noting: a name approved at incorporation is not a name protected against use by others. If the name is going to carry the work — on signage, on certificates, on a programme people come to recognise — trademark registration is a separate exercise and a cheap one beside the cost of changing a name later.
But the absence runs both ways, and it is worth noticing which way.
Because the suffix is permitted to be dropped only by licence, its absence on a company tells you a licence was granted. And because section 8(6) allows the Government, on revocation, to direct that the suffix be added back, the name is also where a revocation becomes visible.
So the name carries the status. An organisation that was a foundation and is suddenly a private limited company has not rebranded. Something happened to its licence, and anybody who understands the section can read that off the letterhead.
Which brings us to the sub-section that founders are least often shown, and it should be shown at the start.
Section 8(6) permits the Central Government to revoke the licence by order where the company contravenes any of the requirements of the section or the conditions of the licence, or where its affairs are conducted fraudulently or in a manner contrary to its objects, or in a manner prejudicial to the public interest.
Four grounds, and note the third and fourth. Contrary to its objects — not unlawful, merely outside what the company said it was for. And prejudicial to the public interest, which is a judgement rather than a breach of a rule.
There is a protection, and it is a real one: a proviso requires that no such order be made without giving the company a reasonable opportunity of being heard. A copy of every such order goes to the Registrar.
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And what follows revocation, because the section does not stop at taking the licence away.
The order may direct the company to convert its status and change its name by adding Limited or Private Limited back. Then, under sub-sections (7) and (8), where the Central Government is satisfied it is essential in the public interest, it may order the company wound up, or amalgamated with another section 8 company having similar objects — and an amalgamation order may constitute a single new company and specify its property, rights and liabilities.
An opportunity of being heard precedes those orders too. The practical point for a founder is a simple one: if a notice of this kind ever arrives, the reply is the case. It is an advocate’s matter from the first letter, and not an occasion for anybody’s documentation service.
We say this plainly because it is the one scenario on this page where the right advice is to go somewhere other than us, immediately.
Gather the first group together and the correct mental model falls out, which is worth holding for the rest of the page.
A section 8 company is not a species of company that happens to be charitable. It is a permission — granted on terms, to be treated differently from an ordinary company — and the corporate shell is what the permission is attached to.
Thinking of it that way makes every later restriction predictable instead of surprising. You will not be puzzled that the objects cannot be changed freely, or that merger is confined, or that surplus cannot come back. A permission has a scope, and staying inside it is the deal.
And if the comparison between this and the other two charitable forms is the question you actually have, our NGO registration page does that properly and this page deliberately does not repeat it.
The first of the three conditions that decide whether this form suits you, and the one with no exception in it.
Section 8(1) requires, as a condition of the licence, that the company intends to apply its profits, if any, or other income in promoting its objects, and that it prohibits the payment of any dividend to its members.
Notice where that prohibition ends up. It is not merely a rule in the Act applying to you from outside. It has to be in your own memorandum, because the Government must be satisfied the company prohibits it. You write your own restriction and then you are bound by it.
There is no threshold, no small-amount exemption, and no approval that lifts it. On this one point the form is absolute.
And immediately a clarification, because the prohibition is routinely over-read and that costs organisations good people.
It does not mean nobody can ever be paid anything. It does not mean the company must spend every rupee it receives in the year it receives it. It does not mean the organisation cannot hold a bank balance, own property, or run a fee-charging activity that generates a surplus.
What it prohibits is one specific thing: distributing profit to members as members.
The over-reading is understandable and is usually transmitted by well-meaning advice — somebody says a section 8 company cannot make a profit, which is wrong, when what they mean is that it cannot hand profit to its members, which is right.
So the distinction that matters in practice is between payment for work and payment for membership.
A founder who runs the organisation full time is doing work, and work may be remunerated. A founder who sits on the board and attends four meetings a year is also doing something, and may be reimbursed for it on reasonable terms. Neither of those is a dividend.
What is not permitted is a payment whose real character is a share of surplus, however it is labelled — and the label is not what decides it.
The honest test, and we offer it as a test rather than a rule. Would the payment still be made, in that amount, if the person were not a member? If yes, it is remuneration. If the amount moves with the surplus rather than with the work, it is something else.
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Being practical about it, because of every question this form attracts, this one arrives most often.
The Act does not fix an amount, and we decline to supply one. What the organisation can do is make the decision properly: the board fixes remuneration, the basis is recorded, the interested person does not decide their own, and the figure bears a visible relationship to the role and to what comparable work costs.
Done that way, a payment is defensible because the reasoning for it exists on paper. Done casually, the same figure is hard to explain two years later to an auditor, a funder, or anybody examining whether the affairs have been conducted in accordance with the objects.
So the protection is procedural rather than numerical. It is not a safe amount that keeps an organisation right. It is a recorded decision, taken by people who were entitled to take it, for reasons that were written down at the time.
A fair observation about how organisations actually get into difficulty here, and it is not usually through greed.
The founders fund the work out of their own pockets for two or three years. Then money starts arriving, and it feels reasonable — because it is reasonable — that the people who carried it should be made whole. The impulse is decent. The instrument available for acting on it does not exist.
Which is the strongest argument for understanding the restrictions on the day of registration rather than in year four. A founder who knew from the start that their contributions were gifts rather than investments is not disappointed later. One who assumed otherwise is, and the disappointment arrives at the point where the organisation is finally working.
If the four of you want the possibility of being repaid, that is a legitimate wish and it points at a different structure. It is better honoured by choosing another form than by trying to engineer a way around this one.
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A point of vocabulary that clears up a good deal of confusion, particularly for organisations that charge fees.
Many charitable organisations run activities that take in more than they spend — a training programme with a fee, a shop, a hall that is let. The excess is a surplus, and having one is not a problem. The Act does not require an organisation to be poor.
What the Act requires is where the surplus goes: applied in promoting the objects. Not distributed, and not applied to something outside the objects.
So the practical question becomes what application to the objects permits, and the answer is broader than nervous founders assume.
Spend it on the programme. Build reserves against a lean year. Buy an asset the work needs. Fund a new activity within the objects. Carry it forward because this year’s plan was delayed.
None of that is a breach, and an organisation that spends recklessly in March to avoid holding a balance is managing the wrong risk. What matters is that the money remains committed to the objects, and a reserve held for the objects is still held for the objects.
Where the accounting and the treatment of reserves need real attention — and on a growing organisation they do — that is a chartered accountant’s territory, and our accounting services page covers the bookkeeping side rather than the judgement.
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Which leads directly into the second condition, by way of the question that arrives at the wrong moment.
It is always some version of: what happens to all this if we stop? And it is almost never asked in the first meeting, because at the first meeting nobody is thinking about stopping.
By the time it is asked, there is usually something to lose — a building, equipment, a reserve built over years — and the answer is the one piece of this subject that cannot be mitigated by good drafting.
So here it is, stated once and plainly before the mechanics.
Money and assets that go into a section 8 company do not come back out to the people who put them in. Not as dividend, which is prohibited outright. Not on a sale and division, because the members have no entitlement to divide. And not on winding up, because the Act directs the surplus elsewhere.
Every other corporate form has a door on that side. This one has it welded shut, deliberately, and the welding is the point of the form rather than a flaw in it.
It follows that the question to settle before registration is not a legal question at all. It is whether everybody contributing is content with that, said in those words, in the room.
The mechanics, because the destinations are specific and knowing them removes any hope of a workaround.
On the winding up or dissolution of such a company, after satisfaction of its debts and liabilities, any surplus assets may be transferred to another company registered under section 8 and having similar objects, subject to such conditions as the Tribunal may impose. Alternatively they may be sold, and the proceeds credited to the Rehabilitation and Insolvency Fund formed under section 269.
Two destinations. Another company of the same kind, or a fund. The members are not a third option, and no clause in your own articles can make them one.
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Worth isolating, because it is the sentence that does the work and it is easily lost inside the longer provision.
A member of a section 8 company has no residual claim on its assets. In an ordinary company, membership carries exactly that: after creditors, what is left belongs to the shareholders in proportion to their holdings. Here, membership carries governance rights and no economic residue at all.
So the word member means something materially different in this form, and a founder who imports the ordinary meaning imports a false expectation with it.
A useful way to say it to a group considering this: you are not becoming owners of anything. You are becoming the people responsible for something that will outlast your involvement and does not belong to you at any point.
A detail in sub-section (9) that is easy to skim and is practically significant.
The transfer to another section 8 company is subject to such conditions as the Tribunal may impose. So the destination is not simply chosen by the departing company and executed; it passes through a forum that may attach terms.
Which means the end of a section 8 company is a proceeding, not an administrative closure. An organisation winding down informally — stopping activity, closing the bank account, letting filings lapse — has not dissolved anything, and has instead accumulated defaults on an entity that still exists.
And the second destination, which exists so that the first is never a dead end.
Where transfer to a similar company is not the route taken, the assets may be sold and the proceeds credited to the fund constituted under section 269. The surplus leaves the charitable sector as an asset and arrives in it as money.
The design intention is visible in having two destinations rather than one: the drafters wanted to be certain that in no circumstance does the surplus revert to the people who contributed it. Both roads lead away from the members.
And the provision that closes the last remaining route, which founders occasionally hope is open.
Section 8(10) provides that a company registered under the section may amalgamate only with another company registered under the same section and having similar objects.
So you cannot merge into a trading company and let the shares do the work. You cannot be acquired. The only organisations you may combine with are ones carrying the same restrictions, which means a combination changes who runs the work and never changes where the value can go.
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Drawing the practical consequence, because this is where the page earns its length.
Before anybody puts significant money into a section 8 company, the contribution should be understood by that person as a gift to a purpose, not as an investment in an organisation. There is no exit, no buy-back, no realisation event and no eventual division.
So say the sentence out loud. This money is going somewhere it cannot return from. We recommend it is said by the person contributing rather than by the adviser, because a person who can say it comfortably has genuinely understood it, and a person who hesitates has just learned something important in time.
Where contributors do want the possibility of return, the honest route is a different structure, or a different arrangement alongside the company — and the second of those needs real advice rather than a page.
The specific case where this becomes concrete, and the one we see most often.
An organisation has been renting. Rent rises. The founders have some money and buying looks obviously sensible, which in pure cash terms it frequently is. The purchase is made in the company’s name because that is tidy.
What has happened is that the single largest asset the founders have assembled has crossed a threshold it cannot come back across. If the organisation closes in nine years, the building does not belong to anybody who paid for it, and the surplus from selling it goes to another organisation or to a fund.
That may be exactly the right outcome and many founders would choose it knowingly. The failure is not the decision; it is making a decision of that size without anybody having said the sentence in the previous section.
Our strongest practical recommendation on this whole page: do not let the property purchase and the registration happen in the same quarter. Register, run a compliance year, and buy when you know what you have built.
It is worth asking why a fact this consequential is so reliably absent from the first conversation, and the answer is not that advisers are hiding it.
Partly sequence: the first conversation is about getting registered, and dissolution is the last thing on anybody’s agenda when they are starting something. Partly tone: it is a discouraging thing to lead with, and a person who leads with it loses engagements to a person who does not.
And partly because it genuinely does not matter to a great many founders, who never expected a return and are untroubled to hear there cannot be one. For them the constraint is invisible, which makes it easy to assume it is invisible to everybody.
Which is why we state all three constraints first and then stop talking. It costs us some enquiries. It has never once cost an organisation anything, and the alternative is a founder learning this in the year they finally had something worth losing.
The third condition, and the one that quietly shapes the next decade of the organisation’s life.
In an ordinary company the objects clause is close to furniture. Most are drafted widely, nobody consults them, and the business does whatever business it finds. Here the clause is operative: the licence was granted because of what it says, and section 8(6) makes conduct contrary to the objects a ground for revoking the licence.
So on this form the objects clause is the constitution rather than the preamble. It is the document against which the organisation’s activity is measured, and it should be drafted by somebody who understands the work rather than assembled from a template.
The section describes the fields, and they are broader than most people expect.
The promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, and objects of that kind. Which covers a very wide range of genuine activity — a sports academy, a research institute, an arts trust, an environmental group, a school programme, a hospital, a skills centre.
The constraint is not that the field must be unusual or heroic. It is that the organisation must exist to promote something in that range and must apply its income to doing so.
A real drafting decision with costs on both sides, and we would not pretend one answer fits everybody.
Draft the objects narrowly, describing precisely what you do now, and the clause is easy to justify — but the organisation outgrows it, and the first adjacent activity is arguably outside the objects.
Draft them so widely that they describe most forms of social good, and nothing constrains you — but a clause describing everything invites the question of what the organisation is actually for, and that question is asked at the licence stage.
The discipline that works: describe the field of work, not the current project. Not this evening coaching centre in this neighbourhood, and not the betterment of humanity. The education of children from under-served schools, as a field, with the current programme as an illustration rather than the definition.
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Which matters so much because the clause is harder to change than any ordinary company document.
Section 8(4)(i) provides that a company registered under the section shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government.
Not by special resolution alone. Not by unanimous agreement of the members. The members may resolve whatever they like; the alteration still requires the Government’s approval before it takes effect.
And the restriction covers the articles as well as the memorandum. So governance mechanics — how the board is constituted, how members are admitted, quorum, tenure — are also outside the organisation’s unilateral control.
Which also explains something founders coming from a business background find odd. In an ordinary company much of this would sit in a shareholders agreement, negotiated privately between the people who hold the shares. Here there are no shares to hold and no economic stake to bargain over, so the governance has nowhere to live except the articles — the one document that cannot be changed without asking.
One word in that sub-section does a great deal of work and is regularly misread.
Previous. The approval comes first. An organisation that alters its articles, operates on the new basis for a year and then applies has not followed the provision; it has acted outside its constitution and then sought permission for what it already did.
This is a sequencing error rather than a bad intention, and it is common. A board changes its own composition rules because the old ones no longer fit, records it properly in its minutes, and nobody in the room knows that this particular company needed approval before the change rather than after.
Where a change is genuinely needed, the sequence is: decide, apply, obtain approval, then implement. Our board resolution and statutory registers and minutes pages cover recording it correctly once the approval exists.
Not in year one, which is the problem. In year one the objects describe exactly what you are doing, because you wrote them last month.
Year three is different. The programme has found what it is good at, a funder has asked for something adjacent, a need has appeared that nobody anticipated, and the organisation has quietly become about something slightly different from what the document says.
At which point there are two honest options: apply to alter the objects, or confine the new activity within the existing ones. The dishonest option, which is to carry on and hope, is also the one that creates a ground under section 8(6).
Worth saying in general terms, because it is the structural reason this provision bites.
Organisations change direction continuously and in small increments. Nobody convenes a meeting to decide that the organisation is now about something else; the work simply drifts, one sensible decision at a time, and each decision is defensible on its own.
The paper does not drift. It says what it said on the day it was filed, and it keeps saying it until an application is made.
So the gap opens silently and is noticed by somebody external. A funder’s due diligence, an auditor’s question, a departmental query — and the organisation discovers it has been operating outside its own objects for two years with nobody having done anything wrong on purpose.
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So can an organisation leave the form altogether? There is a route, and it is conditional rather than open.
Section 8(4)(ii) provides that such a company may convert itself into a company of any other kind only after complying with such conditions as may be prescribed.
Which is not nothing — the route exists. But it should not be treated as a fallback that makes the other restrictions reversible, and in particular it does not undo the one-way door: whatever conditions attach, the form was not designed to be a holding pattern for value that later comes out.
A detail that makes conversion, and revocation, visible to the outside world.
A company that ceases to hold the licence — whether by its own conversion or by revocation under section 8(6), where the order may so direct — takes the word Limited or Private Limited back into its name.
Which is a small administrative consequence with a large reputational one. Every letterhead, board, signboard, email footer and registration that carried the unsuffixed name now carries a company name, and anybody who deals with the organisation can see that something changed.
Closing this group with the practical response, since all three of the above are known in advance.
Draft for the organisation you expect to be in five years rather than the one you are registering today. Describe the field widely enough to contain growth and specifically enough to be meaningful. Put the governance mechanics in the articles with some tolerance built in, because tightening them later needs approval and so does loosening them.
An hour spent on the objects clause at the start is worth more than anything else in the registration. It is the only part of the file that governs, the only part that cannot be changed unilaterally, and the part most reliably copied from somebody else’s document.
And now the part that catches new organisations hardest, because it is not a restriction at all — it is simply the ordinary weight of the form.
Section 8(2) provides that such a company shall enjoy all the privileges and be subject to all the obligations of limited companies. All of them. The licence removes a suffix and adds conditions; it does not reduce the compliance.
So a four-person charitable organisation carries the same annual machinery as a trading company of the same size. That is the trade a founder makes for the board, the audited accounts and the filing trail that institutional funders rely on — and it is the half of the trade nobody budgets for.
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Being specific, because vagueness here is how organisations fall two years behind.
Board meetings at the intervals the Act requires, with notice and minutes. An annual general meeting. Statutory registers maintained. Annual financial statements and the annual return filed with the Registrar. An audit. Director identification kept current. Any change of director or registered office filed within its period.
None of that is difficult individually. Collectively it is a recurring administrative job that somebody has to own, and in a volunteer-run organisation it is nobody’s actual role.
Our ROC annual filing, director appointment and resignation, registered office change and DIR-3 KYC pages each cover a piece of it.
The part most often treated as a formality, and the part that matters most when anybody looks closely.
A section 8 company’s minute book is where the evidence of proper conduct lives. Remuneration fixed by the board. Activity approved as within the objects. Conflicts declared. Decisions taken by people entitled to take them.
Which turns the minute book from a chore into the organisation’s best protection. Every question that can be asked under section 8(6) — was this within the objects, was this payment proper, was this decided by the right people — is answered out of that book or is not answered at all.
And the obligation that surprises small organisations most, because it does not scale down.
A company is audited. There is no size below which that stops being true, and a section 8 company with modest donations and no fee income is audited on the same basis as any other.
That is a real annual cost in money and in effort, and it should be in the budget from the first year rather than discovered when the accounts are due. It is also, to be fair to the form, exactly what gives an institutional funder confidence — audited accounts are the thing they can actually rely on.
The specific trap, and the one we see behind most of the compliance repair work we are asked to do.
A year happens in which nothing much occurs. A founder relocates, funding does not come through, the programme pauses, everybody is busy with their jobs. The organisation is quiet and feels, reasonably, as though there is nothing to report.
The obligations attach to the form, not to the activity. A year with no programme and no money still has board meetings, filings and an audit due — and because nothing was happening, nobody was looking at the calendar.
Defaults then compound quietly for two or three years until something forces a look, and the repair is more expensive than the compliance would have been.
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Now the belief we find ourselves correcting most often here, and correcting it early saves real money.
Registration under section 8 is not a tax exemption. It is an incorporation under company law, licensed by one authority. Exemption from income tax, and the ability to offer donors a deduction, are decisions of a different authority under a different statute, with their own applications, their own conditions and in some cases their own renewals.
So an organisation can be a perfectly valid section 8 company and have no tax exemption at all. Organisations discover this when a donor asks for the receipt that carries the deduction and there is nothing to give them.
We do not state what will be granted, on what conditions, or when, because none of that is ours to say. What we do is tell founders at the start that it is a separate exercise with a specialist, so that it is on the plan from the first month.
And a third registration that is routinely assumed to follow from the first two, and does not.
Receiving contributions from outside India is governed by its own law, with its own registration, its own conditions on use and accounting, and its own renewal. It is not a consequence of being a section 8 company and it is not a consequence of holding a tax exemption.
This is a specialist area and we do not work in it. What we will do is say plainly that if foreign funding is part of the plan, it needs to be investigated before the plan depends on it, because the requirements are substantial and the timelines are not short.
The general shape of the error is the same across all three: founders treat incorporation, tax exemption and foreign-contribution permission as one process with one outcome, because they arrive in the same conversation. They are three separate permissions from three different places.
Closing this group with the magnitude, because it is a reason to take the calendar seriously rather than a reason for alarm.
Section 8(11) provides that where a company makes default in complying with any of the requirements of the section, it is punishable with a fine with a floor of ten lakh rupees and a ceiling of one crore. Every director and every officer in default is punishable with imprisonment for a term up to three years, or with a fine of twenty-five thousand to twenty-five lakh rupees, or both. A proviso applies section 447 where it is proved that the affairs of the company were conducted fraudulently.
Two things to take from that rather than fear. The exposure is personal for directors and officers, not only corporate. And it is attached to the section’s own requirements — the dividend prohibition, the objects, the alteration rule — which is another way of saying that the three constraints at the top of this page are the ones with weight behind them.
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Three kinds of founder, and what each needs from the first conversation is different.
Some are already running something — a school programme, a clinic, a feeding operation — informally, out of their own pocket, and have reached the point where a donor or a department wants a registered entity. They know their work. What they need is the form, chosen properly.
Some have decided on a section 8 company because somebody told them it is the respectable option, or because a grant application listed it. They may be right, and they have usually not been told the three facts in the earlier part of this page.
And some want a structure for something that is not charitable at all — a business with a social description, or a way of holding an asset. For them the honest answer is that this is the wrong form and the wrong page, and saying so early costs nothing.
We do not begin with documents. We begin by describing the three constraints out loud and waiting.
No dividend, ever. Objects that cannot be altered without the Central Government’s prior approval. And on dissolution, surplus going to another company of the same kind rather than to anybody who put money in.
Said in that order, those three sentences do most of the sorting. A founder whose purpose genuinely is the work hears nothing alarming. A founder who was quietly expecting an eventual return hears it for the first time, and that is a conversation to have now rather than in year six.
It is a conversation rather than a form, and it is worth having before anybody pays anybody. Our online legal consultation and video consultation exist for groups who want to talk it through with all the founders in the same call, which on this form is the right way to do it.
Before any of the mechanics, one question, and the answer decides most of what follows.
Where is the money coming from, and what does whoever is giving it require?
A great many founders choose a form on general advice and then discover that their actual funder — a government department, a CSR committee, a foreign donor, a grant-making foundation — wants a particular structure, a particular registration, or a track record the new entity cannot have. The form should answer the funding, not the reverse.
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Where this is the right form, the work is mostly drafting and sequence.
Name availability and the reservation. The memorandum and articles, with the objects clause drafted as the governing document it is going to be rather than as boilerplate. The licence application under section 8 with the declarations and the projected statements it requires. Director identification and digital signatures where they do not exist. The incorporation filing. And the registered office documentation.
Then the part founders value more than any of it: a short note of what has to happen every year afterwards, with the dates.
Three decisions belong to the founders and we decline them every time they are handed over.
The objects. We will draft them, tighten them and tell you where they are too narrow for what you plan or so wide that they will be questioned — but what the organisation is for is not ours to settle.
Who the directors are. And who, specifically, is going to be responsible for the annual compliance by name, because an answer of everybody has always meant nobody.
We also will not help design a structure whose purpose is to take value out of a form built to prevent exactly that. Where that is what is wanted, a company limited by shares is the honest instrument, and our private limited company work is the right page.
Stated plainly, because on this form the temptations are specific.
We will not draft an objects clause written to satisfy a grant rather than to describe the work. We will not include an object the founders cannot explain to us in their own words. We will not state what any tax exemption will be granted or on what timeline, because that is a separate authority’s decision. And we do not offer any arrangement involving a date other than the day a document is actually signed.
One more, and it is the one most often asked. We will not advise on how much a founder may be paid. That it may be reasonable remuneration for actual work is the law’s position; what is reasonable in your organisation is a governance judgement for your board, documented by your board, and an outside drafter supplying a number would be doing you a disservice.
Place Order — no advance, pay after work
The boundary on this subject is worth drawing before anybody needs it rather than after.
Drafting, filing, name reservation, the licence application, the annual calendar — documentation, and ours. Advising on whether a particular activity falls inside the objects, on exposure where something has gone wrong, on a show-cause notice, or on anything to do with a revocation — legal work, and not ours.
Court work is for your advocate, whose fee is engaged and paid by you directly; we do not quote, collect or share it. The moment a notice arrives proposing revocation, that is an advocate’s matter from the first reply, because the opportunity to be heard is the whole of the defence and it is not an occasion for a documentation service.
Tax exemption and foreign-contribution questions sit with a chartered accountant or a specialist, and we say so rather than taking on work we would do worse. Where a dispute with a funder, a landlord or a former office-bearer has to be put in writing, a legal notice is drafted on an advocate’s instructions rather than ordered off a page.
The limits, since on an application that involves a licence, confidence would be misplaced.
That a licence will be granted, or granted by a date. That a name will be available or approved. That any object we draft will be accepted as drafted. That an exemption will follow. Or that a period we state covers anybody’s side of the work but ours.
What we will do is tell you before we start if something in the plan looks likely to attract a question, and we would rather raise it in week one than let it arrive as a clarification three weeks in.
Place Order — no advance, pay after work
A short practical point that saves organisations real trouble around year three.
Keep one folder, and keep the licence in it. The incorporation certificate gets framed; the licence is the document that is actually load-bearing, and it is the one nobody can find when a funder, an auditor or a department asks on what terms the company holds its status.
Alongside it: the memorandum and articles as currently in force, the register of members and directors, the minute books, and the last three years of filings. Our legal file management work exists for organisations that would rather it were held properly; a disciplined honorary secretary manages it in a cupboard.
Place Order — no advance, pay after work
The figure, then what it leaves out. In that order, because the second part is the longer one.
₹14,999, and our side of it generally runs 20 – 45 days.
That covers the name reservation, the memorandum and articles drafted to the objects you settle, the licence application under section 8 with its declarations and projections, the incorporation filing, the registered office documentation, and the written annual calendar.
Set apart so it is read rather than assumed.
Outside it: every government fee and stamp charge, which are the authority’s; digital signatures, which our class 3 DSC and digital signature work covers; PAN and TAN; tax exemption applications, which are separate and belong with a specialist; the annual filings that start the following year, covered by ROC annual filing; audit, which is a chartered accountant’s engagement; and anything arising from a notice or a query about the objects.
On the period: it describes drafting and filing. It describes nothing about how long a licence application is examined, which is not within anybody’s control and is the part of the clock that varies most.
It would be straightforward to end a page like this by recommending the thing the page is about. The honest version is more useful.
A trust is the cheapest and simplest of the three and is often entirely sufficient, particularly for a family or a small group with a settled purpose and modest money. A society suits a membership body that wants to be governed by its members. A section 8 company suits an organisation that expects institutional funders, a board that changes over time, and the scrutiny that comes with both.
The comparison is not ours to make twice. Our NGO registration page sets the three side by side properly, and if you have not read it and have not firmly chosen, read that one before this one. We would rather lose the larger engagement than register the wrong form.
Where a trust or a society is the answer, trust registration, trust deed drafting, society registration and society bye-laws are the pages that cover them.
Place Order — no advance, pay after work
If you do nothing else from this page, sit with these three for an evening. They cost nothing and they are the ones that are expensive to answer late.
One. Is everybody who is putting money in content that it cannot come back to them, in any form, ever — and have you said that sentence to them in those words?
Two. If the work changes direction in four years, will the objects as drafted still cover it — or will you be applying for approval to alter them?
Three. Who, by name, is responsible for the annual compliance, and what happens when that person leaves?
Organisations that can answer all three run smoothly for a decade. The ones that cannot are not badly intentioned; they simply answered a different set of questions at the start.
And one piece of drafting advice we press harder than any other, because it costs a sentence and prevents the commonest crisis.
Write the dissolution provision deliberately, naming the kind of organisation the assets should go to, rather than reciting the statute and moving on. The law already decides that the surplus goes to another company of the same kind; what the law does not decide is which one, and a founding document that says something sensible about that is a gift to whoever has to deal with it.
It is also the clause that makes the one-way door real to the people signing. Drafting it forces the board to picture the end, once, at the beginning — which is the only moment at which picturing it is free.
Gathered in one place, because the parts are easier to accept together than discovered one at a time.
A licence held on conditions, revocable after a hearing. A prohibition on dividend that has no exception. An objects clause that needs the Central Government’s prior approval to change. A merger permitted only with another organisation of the same kind. Surplus on dissolution that cannot reach the members. And the full annual compliance of a company, in an organisation that may have no revenue at all.
None of that is unreasonable. It is the price of a corporate form that the state is prepared to let carry a charitable purpose without the ordinary suffix, and every one of those conditions exists to stop the form being used for something else.
Place Order — no advance, pay after work
If one sentence survives this page, it should be the one that reframes everything else on it.
This is not a company that happens to be charitable. It is a licence to be treated as charitable, attached to a company, granted on conditions the government sets and can withdraw — and the certificate on the wall is the incorporation, while the document that actually holds your status is the licence nobody can find.
Every other company is a vehicle its owners may eventually sell or wind up and share out. This one is a vehicle with the door welded shut on that side, deliberately, and knowing that at the start is the whole of the advice.
The trust route works on an entirely different principle: no central Act governs a public charitable trust, so its deed carries weight that articles of association never have to carry alone. Our trust registration guide explains the four certainties a trust deed has to establish, and the transfer of property that most files leave out.
Of the three usual forms, only this one is actually incorporated. What that means for the other two, and in particular what a group gives up by choosing the cheaper route, is worked through on society registration.
A section 8 company is not simply incorporated. It exists because the Central Government issued a licence under section 8(1) of the Companies Act, 2013, on such conditions as it deems fit, and that licence may be revoked under section 8(6) after a hearing if the company breaches it, conducts its affairs fraudulently or contrary to its objects, or acts against the public interest. Three conditions follow and they are the ones founders are least often told. No dividend may be paid to members, with no exception. The memorandum and articles may not be altered without the previous approval of the Central Government, so a change of direction in year three is an application rather than a resolution. And on winding up or dissolution, surplus assets after debts go to another section 8 company with similar objects on the Tribunal conditions, or are sold with the proceeds credited to the fund under section 269 — never back to the people who put money in. So we start by saying all three out loud and waiting, before any drafting. What we then do: the name reservation, the memorandum and articles drafted to objects you settle, the licence application with its declarations, the incorporation filing, and a written calendar of what recurs every year. What we do not do: choose your objects, advise what a founder may be paid, promise that a licence or an exemption will be granted, or help build a structure whose purpose is to take value out of a form designed to prevent it.
This page is one section of one Act, read closely. Section 8 of the Companies Act, 2013. Sub-section (1) for the licence itself, the categories of object it may be granted for, the requirement that profits and income be applied in promoting those objects, the prohibition on paying any dividend to members, the power to issue the licence on such conditions as the Central Government deems fit, and registration without the word Limited or Private Limited. Sub-section (2), under which the company has the privileges and is subject to the obligations of limited companies. Sub-section (3), under which a firm may be a member. Sub-section (4)(i), under which the memorandum and articles may not be altered except with the previous approval of the Central Government, and (4)(ii) on conversion into another kind of company only in compliance with prescribed conditions. Sub-section (5), on licensing an existing limited company into this section. Sub-section (6) for revocation, its grounds, the mandatory opportunity of being heard, and the direction to add the suffix back. Sub-sections (7) and (8) for what the Central Government may order after revocation, being winding up or amalgamation in the public interest. Sub-section (9) for surplus assets on winding up or dissolution. Sub-section (10), under which the company may amalgamate only with another section 8 company having similar objects. And sub-section (11) for default, where the company faces a fine with a floor of ten lakh rupees and a ceiling of one crore, and every director and officer in default faces imprisonment of up to three years or a fine between twenty-five thousand and twenty-five lakh rupees or both, with a proviso applying section 447 where fraud is proved.
What we have deliberately kept out. No government fee, no processing timeline, no form number, and nothing about tax exemption beyond the fact that it is a separate decision by a separate authority. Exemption and foreign-contribution registration each have their own law, their own conditions and their own renewals, and treating them as a continuation of incorporation is how organisations end up assuming they hold something they have never applied for.
Where each remaining part of this belongs. A chartered accountant for audit, for the projected statements the application wants, and for tax exemption. A specialist for foreign-contribution questions. Your advocate from the moment any notice or query about the objects arrives. Our NGO registration page for the choice between the three forms, which it makes properly and which this page does not repeat; trust registration and society registration for the other two; ROC annual filing, statutory registers and minutes and DIR-3 KYC for the recurring company work; and private limited company registration where, having read the constraints, a founder concludes that an ordinary company is what they actually want.
A section 8 company can never be a small company. That matters more than it used to, because the dematerialisation requirement for private companies is framed by carving small companies out, and this one is outside that carve-out whatever its size. See share transfer documentation.
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