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Section 8 of the Companies Act 2013: Formation of Companies with Charitable Objects, etc.

Chapter II (Incorporation of Company and Matters Incidental thereto) of Companies Act 2013 : SECTION - 8
"Formation of Companies with Charitable Objects, etc."

(1) Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company—

(a) has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(b) intends to apply its profits, if any, or other income in promoting its objects; and

(c) intends to prohibit the payment of any dividend to its members,

the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word "Limited", or as the case may be, the words "Private Limited" , and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.

(2) The company registered under this section shall enjoy all the privileges and be subject to all the obligations of limited companies.

(3) A firm may be a member of the company registered under this section.

(4) (i) A company registered under this section shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government.

(ii) A company registered under this section may convert itself into company of any other kind only after complying with such conditions as may be prescribed.

(5) Where it is proved to the satisfaction of the Central Government that a limited company registered under this Act or under any previous company law has been formed with any of the objects specified in clause (a) of sub-section (1) and with the restrictions and prohibitions as mentioned respectively in clauses (b) and (c) of that sub-section, it may, by licence, allow the company to be registered under this section subject to such conditions as the Central Government deems fit and to change its name by omitting the word "Limited", or as the case may be, the words "Private Limited" from its name and thereupon the Registrar shall, on application, in the prescribed form, register such company under this section and all the provisions of this section shall apply to that company.

(6) The Central Government may, by order, revoke the licence granted to a company registered under this section if the company contravenes any of the requirements of this section or any of the conditions subject to which a licence is issued or the affairs of the company are conducted fraudulently or in a manner violative of the objects of the company or prejudicial to public interest, and without prejudice to any other action against the company under this Act, direct the company to convert its status and change its name to add the word "Limited" or the words "Private Limited", as the case may be, to its name and thereupon the Registrar shall, without prejudice to any action that may be taken under sub-section (7), on application, in the prescribed form, register the company accordingly:

Provided that no such order shall be made unless the company is given a reasonable opportunity of being heard:

Provided further that a copy of every such order shall be given to the Registrar.

(7) Where a licence is revoked under sub-section (6), the Central Government may, by order, if it is satisfied that it is essential in the public interest, direct that the company be wound up under this Act or amalgamated with another company registered under this section:

Provided that no such order shall be made unless the company is given a reasonable opportunity of being heard.

(8) Where a licence is revoked under sub-section (6) and where the Central Government is satisfied that it is essential in the public interest that the company registered under this section should be amalgamated with another company registered under this section and having similar objects, then, notwithstanding anything to the contrary contained in this Act, the Central Government may, by order, provide for such amalgamation to form a single company with such constitution, properties, powers, rights, interest, authorities and privileges and with such liabilities, duties and obligations as may be specified in the order.

(9) If on the winding up or dissolution of a company registered under this section, there remains, after the satisfaction of its debts and liabilities, any asset, they may be transferred to another company registered under this section and having similar objects, subject to such conditions as the Tribunal may impose, or may be sold and proceeds thereof credited to Insolvency and Bankruptcy Fund formed under section 224 of the Insolvency and Bankruptcy Code, 2016.

(10) A company registered under this section shall amalgamate only with another company registered under this section and having similar objects.

(11) If a company makes any default in complying with any of the requirements laid down in this section, the company shall, without prejudice to any other action under the provisions of this section, be punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore rupees and the directors and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees, or with both:


Provided that when it is proved that the affairs of the company were conducted fraudulently, every officer in default shall be liable for action under section 447.





Extra Notes for Readers

(1) The Companies Act, 2013 received the assent of the President on the 29th August, 2013 (Published in the Gazette of India, Extraordinary, Part II - Section 1 by Ministry of Law and Justice, Legislative Department on 30th August, 2013) - link

(2) Section 8 [except sub-section (9)] of the Companies Act 2013 was notified by MCA Notification S.O. 902(E) dated 26th March 2014 (w.e.f. 1st April 2014) - link

(3) Sub-section (9) of Section 8 of the Companies Act 2013 was modified as per the section 255 of the Insolvency and Bankruptcy Code, 2016 - link:
"In section 8, in sub-section (9), for the words "the Rehabilitation and Insolvency Fund formed under section 269", the words "Insolvency and Bankruptcy Fund formed under section 224 of the Insolvency and Bankruptcy Code, 2016" shall be substituted."

MCA has notified section 255 of the Insolvency and Bankruptcy Code, 2016 vide notification no. S.O. 3453(E) dated 15th November 2016 (w.e.f. 15th November 2016) - link .

(4) The Central Government has delegated the powers and functions to the Registrar of Companies vide MCA Notification S.O. 1353 (E) dated 21st May, 2014 ( link ) for the followings :

  • sub-section (1) of Section 8;
  • clause (i) of sub-section (4) of Section 8, except for alteration of memorandum in case of conversion into another kind of company;
  • sub-section (5) of Section 8.
(5) The Central Government has delegated the powers and functions to the Regional Directors vide MCA Notification S.O. 1352 (E) ( link ) dated 21st May, 2014 for the followings :
  • clause (i) of sub-section (4) of Section 8 (for alteration of memorandum in case of conversion into another kind of company);
  • sub-section (6) of Section 8.
(6) Refer the following rules of the Companies (Incorporation) Rules, 2014 - link
(this rule has been amended from time to time)
  • For sub-section (1) of section 8 - Rule 19 (License under section 8 for new companies with charitable objects etc.) [Form No. INC.12]
  • For clause (ii) of sub-section (4) of section 8 - Rule 21 (Conditions for conversion of a company registered under Section 8 into a company of any other kind) [Form No. INC.18]
  • For sub-section (5) of section 8 - Rule 20 (License for existing companies) [Form No. INC.12]
  • For sub-section (6) of section 8 - Rule 23 (Intimation to Registrar of revocation of licence issued under section 8) [Form No. INC.20]




This page was last updated on 20th November 2016.
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