Section 8 of CA 2013 : Section 8: Formation Of Companies With Charitable Objects, Etc

Explanation using Example

Imagine a group of individuals passionate about environmental conservation decide to form an organization. They want to promote sustainable living and protect natural habitats. Their goals include educating the public, organizing clean-up drives, and supporting research on renewable energy. They plan to generate income through grants, donations, and perhaps selling eco-friendly products, but they do not want to distribute any profits as dividends to members; instead, they want to reinvest all profits back into their environmental projects.

They approach a lawyer to help them register their organization. The lawyer suggests they could form a "Section 8 Company" under The Companies Act, 2013, which is designed for entities focused on promoting various causes without the intent of paying dividends. They apply to the Central Government, demonstrating their objectives and operational plans. The government, satisfied with their proposal, grants them a license to operate as a Section 8 Company, exempting them from using "Limited" in their name, recognizing their not-for-profit status.

The organization, now a Section 8 Company, carries out its mission, enjoying the same rights and responsibilities as other limited companies, but with the specific restrictions and privileges of not distributing profits as dividends and focusing on their environmental objectives.