What is a Section 8 Companies with Charitable Objects?

Section -8 Companies with charitable objects etc. is governed under Companies Act, 2013.

As per Section 8 of Companies Act, 2013:-

Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company—

• has in its objects the 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; and
• intends to prohibit the payment of any dividend to its members,

These companies are formed for Non Profit motive (Charitable Purposes) and the profits accrued from its Business / art / skill activity is used to fulfill and promote its main objects. These companies are prohibited to pay any of the dividends to its members.

An NPO/NGO can be formed for promotion of any useful object like sports, education, research activities etc. The term No Profit does not mean that the Company cannot generate profit or income, but it essentially means applying the income for further promotion of the object and not for distributing it to the promoters.