What are the Advantages of Section 8 Company?
A Section 8 company is a non-profit organization formed under the provisions of Companies Act, 2013. Advantages of Section 8 Company, As per Section 8(1) of the Act, a non-profit company is one which works for the promotion of art, culture, science, research, education, social welfare, sports, charity, religion etc. and uses its profits to promote those objects. It should also refrain from distributing dividend to its members. A Section 8 company enjoys exemptions and a variety of benefits from Companies Act and other laws. It is better to incorporate a company form of non-profit organization as it is governed by a central law unlike, co-operative societies and trusts.
Since Section 8 companies are non-profit making companies they are exempted from certain income tax provisions. They are also given numerous deductions and benefits. Individuals donating money in Section 8 companies also avail the benefits of deduction under section 80G of Income Tax Act, 1961. Non-profit making companies also have to pay less stamp duty than others.
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As per Companies Act, 2013 unlike private, one person and public limited companies, section 8 companies do not require any minimum capital contribution for incorporation. They can commence their business without any capital. The fund required for business can be brought in the form of donations and subscriptions from public and members of the company.
No need to use title
A private limited company uses 'Private Limited' as title after its name. But a Section 8 company is exempt from using any suffix or title. However, it can still exercise limited liability without informing the public and users of its limited liability status.
Transfer of ownership
The members of a private limited company are prohibited to transfer their shares. But in a Section 8 Company members can easily transfer the ownership of the company. Both movable and immovable interest of members can be easily transferred to people. Thus, in a Section 8 company ownership of a company can be transferred without too many restrictions.
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