Many people ask, “Is Section 8 an NGO?” because Section 8 companies share non-profit goals with NGOs. In India, however, a Section 8 company is a specific legal form under the Companies Act, 2013, and not a trust or society.
Section 8 companies are incorporated for social or charitable objectives, and while they may operate like NGOs, they are governed by corporate law with added compliance requirements and benefits. A Section 8 company is nonprofit by design—it must reinvest any surplus in its objectives and cannot distribute dividends to members.
What is a Section 8 Company?
A Section 8 company is formed to promote commerce, art, science, education, charity, or other useful objectives without any profit motive. It replaces the older Section 25 (under Companies Act, 1956) and enables the formation of a company limited by shares or guarantee for charitable purposes.
The key feature is that the company must reinvest all profits or income into promoting its objectives. It cannot use its income to benefit its members.
Legal Status and Corporate Governance
Section 8 companies are registered under the Companies Act, 2013 and are recognized as corporate entities—not informal associations. They must obtain a special license from the Central Government to operate.
Key Legal Features:
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Nonprofit Objectives: Income or profit must be applied toward the company’s stated charitable goals.
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Corporate Governance: Managed by a board of directors, unlike trusts (run by trustees) or societies (run by members).
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Tax Exemptions: Eligible to apply for tax exemptions under provisions like Section 12A and 80G of the Income Tax Act.
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Naming and Compliance: Can omit “Limited” or “Private Limited” from their name but must comply with corporate rules like holding board meetings and filing annual returns.
Formation Process of a Section 8 Company
Forming a Section 8 company involves a series of structured legal steps. These ensure transparency and legal accountability.
Steps to Register a Section 8 Company:
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Name Approval: Choose a name that reflects charitable intent.
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Drafting Documents: Prepare Memorandum of Association (MoA) and Articles of Association (AoA).
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Application Filing: File Form INC-12 with supporting documents including MoA, AoA, declarations (Form INC-14), and financial projections.
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RoC Review: Registrar of Companies reviews the application and grants a license if all criteria are met.
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Incorporation: Upon approval, the Certificate of Incorporation is issued, and the entity is legally recognized.
Objectives and Activities of Section 8 Companies
Section 8 companies focus on public benefit activities. Their work overlaps with NGOs in many sectors.
Common Objectives Include:
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Education and literacy
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Healthcare and sanitation
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Environmental conservation
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Art, culture, and heritage preservation
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Scientific research
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Women and child welfare
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Poverty alleviation
Because they are formally incorporated, Section 8 companies enjoy greater credibility, particularly with institutional donors, CSR contributors, and government agencies.
Differences Between Section 8 Company and NGO
While Section 8 companies function like NGOs, they are not the same legally. “NGO” is a broad term used for all non-governmental, not-for-profit organizations—including:
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Trusts (registered under Indian Trusts Act)
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Societies (under Societies Registration Act)
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Section 8 Companies (under Companies Act)
Key Differences:
| Feature | NGO (Trust/Society) | Section 8 Company |
|---|---|---|
| Governing Law | Trust Act / Societies Act | Companies Act, 2013 |
| Management | Trustees or Managing Committee | Board of Directors |
| Compliance | Minimal (varies by state) | Strict (ROC filings, meetings) |
| Profit Distribution | Not allowed | Not allowed |
| Fundraising | Donations and grants | Donations, CSR, government grants, foreign funding (FCRA) |
Section 8 companies are generally preferred for larger scale operations, CSR partnerships, and receiving foreign contributions (with proper registration under FCRA).
Ongoing Compliance Requirements
Once formed, a Section 8 company must follow strict compliance rules:
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Annual General Meeting (AGM): Mandatory for all companies.
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Financial Statements: Must maintain books and get accounts audited.
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Returns Filing: File annual returns and financials with RoC.
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Board Meetings: Hold at least two board meetings a year.
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Tax Filings: Claim 12A and 80G exemptions as per income tax provisions.
Non-compliance can result in penalties or revocation of the Section 8 license.
Examples of Section 8 Company Activities
Many reputed Indian organizations are structured as Section 8 companies and undertake impactful social initiatives.
Examples Include:
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Azim Premji Foundation: Focuses on education reforms.
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Reliance Foundation: Works on health, rural development, and disaster relief.
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Infosys Foundation: Involved in education, healthcare, and arts.
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WaterAid India: Promotes access to safe water and sanitation.
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NSDC (National Skill Development Corporation): Skilling youth for employment.
These examples show that Section 8 companies can scale up operations while maintaining charitable purpose and legal compliance.
Conclusion
So, is Section 8 an NGO? Legally, no—a Section 8 company is a non-profit company formed under the Companies Act, not a trust or society. However, yes in spirit—because Section 8 companies operate with the same nonprofit objectives as NGOs.
They offer a corporate structure for executing social missions while enjoying tax benefits, credibility, and regulatory oversight. For those seeking to formalize their social initiatives, a Section 8 company provides a reliable, transparent, and scalable legal vehicle.