Section 8 (NGO)
Section 8 Company:
i. Is incorporated for the promotion of commerce, art, science, education, research, sports, charity, social welfare, religion, protection of environment or any such other object.ii. It intends to apply all its profits, income, or other earnings, in promoting these objects.
iii. Pays no dividend or income to its members.
The income of NPO cannot be used for paying out dividends to the company’s members and has to be for the promotion of charitable objectives. Such companies obtain an incorporation certificate/License from the central government and are liable to adhere to the rules specified by the government.
According to the rules, failure to comply with the responsibilities stated by the Central Government may lead to the winding up of the company on the orders of government. Besides, strict legal action will be taken against all the members of the company if the objectives laid down by the company proves to be bogus.
Section 25 Company (under Companies Act, 1956) is a prior version. Section 8 Companies are a legal form for Non-Profit Organizations (NPOs) or Non-Governmental organizations (NGOs). A Section 8 Company has the authority to work anywhere in the country.
