Whenever we hear about setting up a company, one common goal is to earn profits. But, not all companies are set up with an aim to earn a profit. Some of them are there to promote a specific genre or field. These companies are called Non-Profit Company or section 8 companies.

Non Profit companies are set up with the sole purpose of promoting a specific field related to art, science, research, social welfare, charity, commerce, etc. All the profit which is generated by these companies is used only, for the promotion of such field and no other purposes.

Under the companies act, these companies are registered under Section 8 of the Company Act of 2013, therefore they are also known as section 8 companies. These companies are directly moderated and work under the Ministry of Corporate Affairs (MCA) and therefore, all the approvals are subjected to Central Government. These companies are similar to a trust, or a society, however, the difference is that trust or societies are registered with the state government and not the central government. A key feature of establishing a Non Profit company is that these companies can be set up without using the word “limited” or “Private Limited”.

These companies or organizations are not limited by shareholders but they have guarantors. Such companies are promoted and encouraged by the government because these organizations help to promote fields that are for the betterment of the society, thus helping out the government in promoting such areas, which the government was not able to achieve due to some factors. These companies act as a direct link between society and welfare and people who want to work towards the same and promote the same. Therefore, these organizations provide a platform for such people. The fact that the government is not able to provide such a platform due to some reason has created a huge demand for Non Profit Organisation’s, and this was the purpose why the idea of bringing in such an organization was taken up by the government.

These companies carry many advantages with them, such as:

1. The process of forming a section 8 company is much easier as compared to other types of company.
2. The minimum paid-up capital criteria are not required to be fulfilled.
3. It has greater flexibilities.
4. Tax benefits are given to such organizations, as per section 12AA and section 80G of the Income Tax Act.
5. Exemption from stamp duty registration.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.