Registration·6 min read
Starting a Non-Profit? Guide to Section 8 Company Registration
Build donor trust with a Section 8 company—MCA-regulated, no dividends, and eligible for 12A/80G when you are ready for CSR and institutional grants.
December 18, 2023
What you'll take away
- Section 8 companies cannot distribute profits to members—surplus reinvested in objects.
- Higher credibility with CSR donors than unregistered trusts in many programs.
- Requires licence from MCA before incorporation (Form INC-12).
- Pelago handles licence, incorporation, and 12A/80G coordination with CAs.
Section 8 vs trust vs society
Section 8 company (Companies Act 2013) is for charitable objects—arts, science, education, sports, environment. It operates like a company but without profit distribution.
Trusts are simpler but slower to change; societies democratic but less familiar to corporate donors.
| Factor | Section 8 | Trust |
|---|---|---|
| Regulator | MCA | State charity commissioner |
| CSR appeal | High | Medium |
| Equity investment | Not for profit distribution | N/A |
Licence and incorporation flow
- File INC-12 for licence with MOA objects, projected income/expense, promoter background.
- After approval, file SPICe+ with Section 8-specific attachments.
- No 'Ltd' suffix—names often include Foundation, Association, etc.
Timeline commonly 4–8 weeks including MCA scrutiny.
Founder tip: Draft objects clause tightly—vague 'social work' invites MCA objections.
12A and 80G registrations
12A exempts organisation income tax; 80G lets donors deduct donations (with limits). Applied via Income Tax Department after incorporation.
CSR-eligible companies prefer 80G and clean FCRA (if foreign funds) before large grants.
Governance essentials
Board meetings, conflict of interest policy, and project-wise fund tracking are donor due diligence items.
Pay reasonable salaries—excessive related-party payments trigger scrutiny.
When not to choose Section 8
For-profit social ventures wanting dividends should use regular Pvt Ltd with impact reporting, not Section 8.
Pelago advises structure based on funding source (CSR vs impact VC vs grants).