Section 8 Company

Evidently, this is the most common form of company incorporation. Governed by the Companies Act, 2013, it requires a minimum of 2 Directors and 2 Shareholders, with one of the Directors being an Indian Resident and Indian Citizen. This business entity limits owner liability to their shareholdings and the number of shareholders to 200 and restricts shareholders from publicly trading shares. Example- Flipkart, Ola and so on.

Benefits

Tax Benefits
Section 8 Company is a non-profit organisation, so specific income tax laws do not apply to them. Numerous additional tax advantages and deductions are also provided to them. They utilise the benefits offered by Section 80G of the Income Tax Act of 1961. Additionally, they pay less stamp duty than other businesses.
Use of title
Section 8 of the IT Act exempts them from the use of any suffix or title, in contrast to the other organisations that use the title "limited company." They don't have to disclose their limited liability status to the public in order to carry out their duties.
Separate Legal Entity
A Section 8 Company also holds its own identity like other companies' structures and has its own independent legal standing from its members. A Section 8 Company also has perpetual existence.
The ease of transfer of title/ownership
Unlike the limited liability companies that are not allowed to transfer the title or ownership, Section 8 of the Income Tax Act, 1961 enables the transfer of title or ownership of both movable and immovable interest with no hurdles or restrictions of any sort.

Limitations

Zero Benefits
‍The companies' profits could only be used in limited fields such as art, commerce, science, sports, environmental protection, and areas of such sort and not on anything else. The company members will get zero benefits or any advantages out of the Company’s income. They could only be reimbursed for their pocket expenses that might have occurred during the course.
No profit distribution
There could be no distribution of the profits among shareholders or partners.
Stringent rules and Regulations
The central government has imposed a number of requirements that must be met, and these rules and impositions must inevitably be incorporated in their memorandum of association and articles of association or in accordance with the central government's instructions. A special licence from the federal government is required for Section 8 businesses.
Alteration in MOA and AOA
The Memorandum of Association (MOA) and the Articles of Association (AOA) of such a corporation cannot be changed or amended without the prior consent of the central government.

Documents Required

Articles of Association (aka AOA)
Memorandum of Association (MOA)
Declaration by the first director(s) as well as a subscriber(s)
Proof of Registered office address
Copy of utility bills such as electricity bills, water bills, or gas bills
A resolution passed by the promoter company
Consent of Nominee (INC–3)
Resident and identity proof of nominees, subscribers & applicants

Registration/ Incorporation Process

Obtain DSC (Digital Signature) through Government certifying agencies to file the forms for company formation.
Apply for DIN (Director Identification Number), which is an identification number for a director through SPICe+ Part B. Under this process of filing, a maximum of three directors can apply for DIN. You can apply for incorporation. PAN, TAN, GSTIN, EPFO. ESIC, etc. In contrast, Part A helps the applicant to register the proposed company name. In this case, it also issues a licence for the Section 8 company.
Section 8 companies are required to file MOA and AOA as pdf attachments to SPICe-32. Along with mandatory documents, including form DIR-2 as Director’s consent.
Once the documents are verified and approved, the Registrar issues a Certificate of Incorporation with CIN along with the PAN and TAN of the company.

Post-Incorporation Compliances

Annual General Meeting to be held every financial year and to be filed under MGT 15.
A company must appoint its first auditor within 30 days of incorporation by its board of directors, and in case the board of directors and the same are filed under AOC 4.
Filing of Annual Returns through MGT7 with relevant ROC.
Income Tax Returns to be filed with the Tax department in form ITR 6 on or before September 30th of the financial year.
Sec 8 company is under obligation to issue share certificates to the shareholders of the company within 60 days from the date of incorporation of the company.
Disclosure of Director’s Interest
Management of statutory registers
Every section 8 company must submit a declaration of the commencement of business within 180 days of the date of formation as a post-incorporation obligation.

Closure of Section 8 Company

Companies that are registered under Section 8 can close their doors by surrendering their charity company licence. The licence can be revoked by changing the business into a regular company. The conversion of a Section 8 company to a one-person company is impossible.