Section 8 of the Companies Act is a special provision that allows for the registration of not-for-profit companies. This type of company must have “section 8” in its name.
The main benefit of company registration under section 8 is that the company will have certain tax exemptions. For example, section 8 companies are exempt from paying income tax on profits that are used for charitable purposes.
Another benefit of this registration type is that it can help build trust and credibility with the public. This is because section 8 companies are more committed to their cause than profit-making businesses.
If you are considering starting a not-for-profit company, you should consider registering under section 8 of the Companies Act. Doing so will give you access to several benefits that can help your business to succeed.
Advantages of a company registered under section 8
Company registration has many advantages under section 8 of the Companies Act, 2013. Some of the top benefits are as follows:
1. It helps to promote social welfare.
2. It encourages companies to undertake charitable and philanthropic activities.
3. It provides legal recognition to the company.
4. It helps to build trust and confidence among shareholders, investors, and other stakeholders.
5. It helps to create a positive image of the company in the market.
Disadvantages of a company registered under section 8
A company registered under section 8 of the Companies Act has a few potential disadvantages. One of these is that the company may be perceived as too small or insignificant to warrant this type of registration. Additionally, the company may find it more difficult to raise capital from investors or to borrow money from financial institutions if it is not registered under section 8.
Another potential disadvantage is that the company may be required to disclose more information about its business activities than it would otherwise have to if it were registered under a different section of the Companies Act. This could lead to competitive disadvantages if the information disclosed is confidential or sensitive.
Lastly, companies registered under section 8 may be subject to more stringent requirements and reporting obligations than those registered under other sections of the Companies Act. This could burden the company, particularly if it is a small or medium-sized enterprise.
How to register a company under section 8?
Registering your company under section 8 of the Companies Act has many benefits. Some of these benefits include:
1. Your company will have a legal identity and be recognized by the government.
2. Your company can enter into contracts and transactions in its name.
3. Your company will be able to sue and be sued in its name.
4. Your company will have perpetual succession, meaning it will not be affected by the death or retirement of its members.
5. Your company will have a common seal, which can be used to authenticate documents on its behalf.
6. Your company will be required to maintain certain records, giving greater transparency and accountability.
7. Your shareholders will have limited liability, meaning they will not be held liable for the debts of the company beyond the amount they have invested.
8. You will be able to list your company on the stock exchange, which can help you raise capital from investors.
Conclusion
There are many benefits of section 8 company registration form, but these are the top tips that believe to be the most important. By registering your company under this section, you can enjoy tax breaks and incentives and easier compliance with government regulations. You will also be able to build a strong brand identity for your business, which can help you attract more customers and partners. If you are looking to start or grow your business, then a company registered under section 8 is something you should consider.
