A Section 8 company is registered with charitable objects such as promotion of sports, arts, science, education, preservation of environment, religion, charity etc.Section 8 companies are not restricted from making profit but they cannot distribute profit shares among members. The profit acquire from any activity should be utilized for charity activity for which the company formed for.
The Section 8 company (Charitable Organization) is registered under Section 8 of Companies Act 2013, which provides it special status due to its objects. Section 8 Companies have various exemptions and relaxations compared to any other companies.
A Charitable Organization with its registration under Section 8 of Companies Act 2013, it obtains a special status – distinct from other types of business entities. Being a charitable Organization, Section 8 company can receive donation from any parties/companies. A section 8 company not only enjoys tax exemptions, but also the donors can claim an exemption for the donation made (under Income Tax). Apart from the tax exemptions the company is also exempted from the applicability of many compliances and related provisions.
A section 8 company like any other registered companies has a separate legal identity apart from its members, which allows the organization to hold assets and liabilities in its own name. The change in members or the Directors neither affects its existence or the assets & liabilities or rights & obligations.
A Charity organization registered under Section 8 of Companies Act 2013 ensures limited liability to its member. The liability of the members are limited only to the extent of the capital subscribed and unpaid. The losses and obligations of a Section 8 company do not create a charge over personal assets of its members or directors, which helps the promoters to freely run the nonprofit organization.
Even though the Section 8 Company enjoys the benefits of the corporate entities, it is not labeled as a corporate entity, there for it does not have to suffix any terms like ‘Private Limited’ or ‘Limited’ after its name. This exemption is provided for draw attention of third parties and other companies to the company’s purpose and not its status assuming it is profit making organization.
Identification plays an important role in making a business outstand in competitive market, build a unique and distinctive name for your business hence enhance your brand’s trust and value. Consumers should identify activity of your business from the brand name so that they can relate your business with its offerings.
Even though it meets all the above criteria, once again make sure that the brand name to be short, easy to remember and simple to pronounce or spell.
The name of a section 8 company must include suffix like Foundation, Forum, Federation, Chambers, Association, Council etc.
Name of the Section 8 Company does not required to add a suffix like ‘Private Limited’ or ‘Limited’
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