Can a Section 8 Company Be an NGO?
The Section 8 company registration process ensures that such entities are legally structured to operate with transparency, accountability, and public trust.
In India, the term NGO (Non-Governmental Organization) is widely used to describe entities that work for social welfare, charity, education, healthcare, and similar causes without a profit motive. But when it comes to structuring an NGO legally, several forms are available—Trusts, Societies, and Section 8 Companies. Among these, the Section 8 company is one of the most popular and credible forms. This article answers a common question: Can a Section 8 company be an NGO? and explains the process and significance of Section 8 company registration in India.
Understanding Section 8 Company
A Section 8 company is a legal entity registered under Section 8 of the Companies Act, 2013. It is formed with the objective of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or protection of the environment. Unlike other companies, a Section 8 company does not aim to make profits. Any income or profit earned must be used solely to promote its objectives.
Thus, by definition and legal standing, a Section 8 company is an NGO. It is recognized by the Indian government as a non-profit organization. The Section 8 company registration process ensures that such entities are legally structured to operate with transparency, accountability, and public trust.
Why Choose a Section 8 Company for NGO Purposes?
Many individuals and groups aiming to establish an NGO opt for Section 8 company registration due to the advantages it offers:
- Legal Recognition: A Section 8 company is registered under the Companies Act, making it more credible in the eyes of stakeholders, donors, and government bodies.
- Perpetual Existence: It enjoys perpetual succession, which means its existence is not affected by changes in leadership or membership.
- Tax Benefits: After Section 8 company registration, the organization can apply for
- 12A and 80G registration, which allow for income tax exemption and tax benefits to donors.
- Transparency: Regular filing and auditing requirements ensure that the entity operates transparently, which is essential for receiving CSR funds and foreign donations.
- Easier to Get FCRA Registration: A Section 8 company stands a better chance of getting approval under the Foreign Contribution Regulation Act (FCRA), making it eligible to receive foreign funds.
Section 8 Company vs Other NGO Structures
In India, NGOs can be formed as:
- Trusts (under Indian Trust Act, 1882)
- Societies (under Societies Registration Act, 1860)
- Section 8 Companies (under Companies Act, 2013)
Compared to Trusts and Societies, a Section 8 company registration offers better governance and stricter compliance, which ultimately builds more public confidence. Moreover, many corporate donors and government agencies prefer working with Section 8 companies due to their organized legal framework.
The Process of Section 8 Company Registration
To register a Section 8 company in India, the following steps must be followed:
- Digital Signature Certificate (DSC): The proposed directors must obtain a DSC.
- Director Identification Number (DIN): DIN must be obtained for all directors.
- Name Approval: Apply for name reservation through the RUN (Reserve Unique Name) service of MCA.
- Draft MOA & AOA: Draft the Memorandum of Association and Articles of Association detailing the company’s objectives and rules.
- Filing of SPICe+ Form: Submit the SPICe+ form along with the required attachments, including declarations and affidavits.
- Approval by ROC: The Registrar of Companies (ROC) will examine the application and issue a Certificate of Incorporation if everything is in order.
Once the Section 8 company registration is complete, the NGO can begin operations and apply for other necessary approvals like PAN, TAN, 12A, 80G, and FCRA (if applicable).
Documents Required for Section 8 Company Registration
Here are some of the primary documents required for Section 8 company registration:
- PAN and Aadhaar card of all directors
- Passport-size photographs
- Address proof of directors
- Proof of registered office (rent agreement or ownership proof)
- Utility bill of registered office
- Declaration of all directors
- MOA & AOA
Proper documentation is critical to ensure a smooth Section 8 company registration process.
Can a Section 8 Company Receive Donations?
Yes, after Section 8 company registration, the entity is eligible to receive both domestic and international donations. However, to provide tax benefits to donors, the organization must obtain 80G certification from the Income Tax Department. For receiving foreign contributions, FCRA registration is a must.
Final Thoughts
So, can a Section 8 company be an NGO? The answer is a clear yes. It is not just a type of NGO but arguably the most credible form in India. The structured legal framework, regulatory compliance, tax benefits, and access to CSR and foreign funding make it a preferred choice for social entrepreneurs and non-profit enthusiasts.
If you are planning to start an NGO in India, Section 8 company registration could be your best bet. It enhances trust among donors and beneficiaries while ensuring that your operations remain legally compliant and transparent.
In summary, Section 8 company registration is more than just a formality—it's a strategic decision that lays the foundation for a successful and sustainable NGO in India.