Section 8 Company Registration in Kerala: Process, Restrictions and Tax Registrations

A Section 8 company is a company formed for charitable or other not-for-profit objects, which applies its income to those objects and does not pay dividends to its members. It is the form preferred by many NGOs, foundations, chambers of commerce, professional associations, research bodies and CSR implementing organisations, because it combines not-for-profit status with the governance and credibility of a company.

This article explains when a Section 8 company is the right choice, how it is incorporated, the restrictions it operates under, and the registrations it needs to receive donations, CSR funds and grants.

Section 8 company, society or trust?

Feature	Section 8 company	Society	Trust
Law	Companies Act, 2013	Kerala Societies Registration Act, 2025 (earlier, the 1955 and 1860 Acts)	Indian Trusts Act principles and a registered trust deed
Regulator	MCA, through the Registrar of Companies	Registration Department, Kerala	No specific regulator; Income-tax and other authorities
Minimum persons	2 members and 2 directors (private) or 7 members and 3 directors (public)	7 members	2 trustees (generally)
Area of operation	Throughout India	As stated in the memorandum	As stated in the deed
Credibility with donors and CSR	High, because of statutory governance and public filings	Good	Varies
Change of objects	Needs Central Government approval	By special resolution and registration	Depends on the deed

For a membership-based local organisation, a society may be simpler. A Section 8 company suits organisations that expect institutional or CSR funding, operate in more than one State, or want a clear governance structure. See registering a society in Kerala.

Permitted objects

A Section 8 company may be formed to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other similar object. Its profits and other income must be applied only to these objects, and no dividend can be paid to its members. The objects should be drafted specifically, because the same objects will be examined again when the company applies for income tax registration and approval under section 80G.

Key features

• Name: the company does not need to use “Limited” or “Private Limited”. Names usually include words such as Foundation, Forum, Association, Federation, Council or Chambers, which indicate its not-for-profit character.
• No minimum capital: a Section 8 company can be formed with share capital, or as a company limited by guarantee without share capital.
• No dividend: members cannot receive dividends or any distribution of profits. Reasonable remuneration for services actually rendered, and reimbursement of expenses, are allowed within the limits of the licence and tax law.
• Licence: the company operates under a licence granted by the Central Government. The licence can be revoked if the company acts against its objects or the conditions of the licence, or conducts its affairs fraudulently.
• Assets on winding up: remaining assets cannot go to members; they are transferred to another Section 8 company with similar objects, or as directed by the tribunal.

Incorporation procedure

Incorporation and the Section 8 licence are applied for together through the SPICe+ form on the MCA portal. The CRC grants the licence and issues the certificate of incorporation, and the company comes under the Registrar of Companies, Ernakulam, if its registered office is in Kerala. The application includes:

• Memorandum of Association with the objects, and Articles in the form prescribed for Section 8 companies
• Declaration in Form INC-14 by a practising professional that the draft memorandum and articles comply with section 8
• Declaration in Form INC-15 by each subscriber
• An estimate of future annual income and expenditure for the next three years, with sources of income and objects of expenditure
• Identity and address documents of the directors and subscribers, and documents for the registered office

The name is reserved through RUN or Part A of SPICe+ like any other company. The general procedure is explained in company registration in Kerala.

Restrictions after incorporation

• Alteration of the memorandum, including the objects, requires the prior approval of the Central Government.
• Conversion into another kind of company, or amalgamation with a company that is not a Section 8 company, requires Central Government approval and is permitted only on conditions.
• Payments to members, directors and their relatives should be limited to reasonable remuneration for services, rent for premises and interest on loans at permitted rates, and should be documented and approved.
• Contravention of section 8 attracts a fine on the company of ₹10 lakh to ₹1 crore, and on directors and officers in default, a fine of ₹25,000 to ₹25 lakh, imprisonment of up to three years, or both.

Compliance

A Section 8 company files its financial statements (AOC-4) and annual return (MGT-7) with the Registrar, holds an annual general meeting, and maintains registers and minutes, like any company. Section 8 companies enjoy some relaxations, for example on the frequency of board meetings, which can be held at least once in each half of the calendar year. Its accounts must be audited every year. See the annual compliance calendar.

Registrations for donations, CSR and grants

Incorporation as a Section 8 company does not by itself make the company tax-exempt. The following registrations are separate and usually needed:

Registration	Purpose
Section 12A/12AB (Form 10A)	Exemption of the company’s income from income tax, subject to application of income to its objects
Section 80G (Form 10A)	Allows donors to claim a deduction for their donations
CSR-1 with the MCA	Required to receive CSR funds from companies as an implementing agency
NGO Darpan (NITI Aayog)	Required for many government grants and schemes
FCRA registration or prior permission	Required before receiving any foreign contribution
GST	Where the company supplies taxable services or goods and crosses the threshold; many charitable activities are exempt

New organisations receive provisional registration under sections 12A and 80G, and must apply for regular registration within the prescribed time after they begin activities.

Frequently asked questions

How many members are needed to form a Section 8 company?

At least two members and two directors for a private company, or seven members and three directors for a public company.

Can directors of a Section 8 company receive salary?

A director who renders services can receive reasonable remuneration, if permitted by the articles and approved as required, but the company cannot distribute profits. For income tax exemption, payments to persons connected with the organisation are closely examined.

Is a Section 8 company better than a trust for CSR funding?

Companies giving CSR funds generally prefer Section 8 companies, registered societies and trusts that have CSR-1 registration and a good track record. A Section 8 company is often seen as having stronger governance and transparency because of its public filings with the MCA.

ചുരുക്കം (Summary in Malayalam)

ചാരിറ്റി, വിദ്യാഭ്യാസം, സാമൂഹിക ക്ഷേമം, കല, ഗവേഷണം, പരിസ്ഥിതി സംരക്ഷണം തുടങ്ങിയ ലാഭേച്ഛയില്ലാത്ത ലക്ഷ്യങ്ങൾക്കായി രൂപീകരിക്കുന്ന കമ്പനിയാണ് സെക്ഷൻ 8 കമ്പനി. വരുമാനം ലക്ഷ്യങ്ങൾക്ക് മാത്രം ഉപയോഗിക്കണം; അംഗങ്ങൾക്ക് ലാഭവിഹിതം നൽകാൻ പാടില്ല. കമ്പനി രജിസ്ട്രേഷനും സെക്ഷൻ 8 ലൈസൻസും SPICe+ വഴി ഒരുമിച്ച് ലഭിക്കും. നികുതി ഇളവിനും സംഭാവനകൾക്കും 12A, 80G രജിസ്ട്രേഷനും, CSR ഫണ്ട് ലഭിക്കാൻ CSR-1 രജിസ്ട്രേഷനും, വിദേശ സംഭാവനയ്ക്ക് FCRA രജിസ്ട്രേഷനും പ്രത്യേകം എടുക്കണം.

This article gives a general overview of Section 8 companies under the Companies Act, 2013 and related registrations. Forms, procedures and tax rules are revised from time to time; for accurate and current requirements, refer to the MCA and Income Tax portals. The article is not advice on any particular case.