companies with charitable objects, also known as Section 8 Companies in India, are a specific type of company established for charitable or social welfare purposes, not for generating profits. Their primary focus is on promoting social good through activities like:

• Education(e.g., running schools, providing scholarships)
• Arts and Culture(e.g., supporting museums, promoting artistic expression)
• Science and Research(e.g., funding scientific research, promoting innovation)
• Environment(e.g., conservation efforts, promoting sustainability)
• Social Welfare(e.g., poverty alleviation, providing healthcare services)
• Religion(e.g., managing religious institutions, promoting religious education)

Key Characteristics of Section 8 Companies:

• Non-profit Motive: Profits earned, if any, must be re-invested towards achieving the company’s charitable objectives. No dividends can be distributed to members.
• Limited Liability: Members’ personal assets are protected from company liabilities.
• Separate Legal Entity: The company has a distinct legal existence from its members.
• Compliance Requirements: Section 8 companies need to comply with specific regulations outlined in the Companies Act, 2013. These may include filing annual returns and maintaining financial records.

Benefits of Setting Up a Section 8 Company:

• Tax Exemptions: May be eligible for tax benefits on donations and income received for charitable purposes.
• Credibility and Trust: The legal structure enhances credibility and attracts philanthropic contributions.
• Limited Liability Protection: Provides a layer of protection for founders and members.

Things to Consider Before Setting Up a Section 8 Company:

• Charitable Objectives: Clearly define the company’s social goals and how it will achieve them.
• Compliance Requirements: Understand the regulations and reporting obligations involved.
• Fundraising Strategy: Develop a plan to secure funding for the company’s activities.

If you’re interested in establishing a company focused on social good, a Section 8 Company might be a suitable option. Remember to consult with a legal professional to ensure you meet all the requirements and choose the most appropriate structure for your specific charitable endeavors.

Example

• Tata Trusts: Works in areas like education, healthcare, livelihood creation, and rural development.
• The Akshaya Patra Foundation: Provides mid-day meals to underprivileged children in government and government-aided schools.
• CRY (Child Rights and You):Advocates for child rights and works towards improving the lives of underprivileged children.

Specific Cause-Oriented Organizations:

• Goonj: Collects and distributes used clothing and household goods to underprivileged communities.
• Wildlife Trust of India: Works towards wildlife conservation and habitat protection.
• Helpage India: Provides care and support to elderly people in India.

Smaller, Community-Based Organizations:

• Local animal shelters: Provide care and adoption services for homeless animals.
• Educational NGOs: Offer educational programs and support to underprivileged children in rural areas.
• Women’s empowerment organizations: Promote women’s rights and provide training and resources for women entrepreneurs.

Social Enterprises:

• Barefoot College: Trains rural women from developing countries to become solar engineers.
• Selco India: Provides clean energy solutions for rural communities.
• Aravind Eye Foundation: Offers affordable eye care services to underprivileged communities.

These are just a few examples, and the landscape of charitable companies in India is vast. There are organizations working on practically every social issue imaginable. You can find more information about specific companies by searching online directories of NGOs in India or based on your area of interest.

Case laws

Since “Companies With Charitable Objects” is a broad topic, relevant case laws often focus on specific aspects like registration, exemptions, or activities. Here are some examples:

• Registration under Section 8: Auroveda Integral Foundation v. Commissioner Of Income Tax (Exemption), Jaipur (2017) – This case highlights factors considered while granting registration under Section 8 of the Companies Act, 2013, specifically for companies with charitable objects.
• Exemption from Income Tax: SC delivers two landmark judgments on exemptions claimed by Charitable Institutions (2022) – This news article summarizes Supreme Court judgments on income tax exemptions for charitable institutions. While not a direct case law, it provides insights into relevant legal principles.

Finding More Case Laws

Here are some resources to help you find more relevant case laws:

• Indian Kanoon: Search for keywords like “Section 8 Company,” “Charitable Objects,” “Income Tax Exemption,” etc., combined with “Companies Act, 2013” for focused results. 
• National Law Library: This website allows searching legal materials, including some case laws. 

Additional Tips

• Legal research databases: Some subscription-based legal research databases might provide more comprehensive case law search options. Consider consulting a librarian or legal professional for access.
• Focus on specific issues: Refine your search based on specific questions you have about companies with charitable objects. For example, are you interested in registration requirements, tax exemptions, or permissible activities?

Disclaimer: This information is for general informational purposes only and should not be construed as legal advice. Please consult with a qualified legal professional for specific legal matters related to companies with charitable objects.

Faq questions

• What are companies with charitable objects?

These are companies established not for profit, but to promote social welfare, charitable activities, or other purposes that benefit society. Examples include educational institutions, environmental NGOs, and public welfare foundations.

• What are the different types of companies with charitable objects?

In India, the primary legal structure for such companies is the Section 8 Company. It operates under the Companies Act, 2013.

• What are the key differences between a company with charitable objects and a regular company?
  • Profit Motive: These companies don’t aim to generate profits for distribution to members or shareholders. Any surplus income needs to be reinvested in achieving their charitable objectives.
  • Compliance: While subject to certain regulations, they generally have less stringent compliance requirements compared to for-profit companies.
  • Tax Benefits: May be eligible for tax exemptions and deductions on donations received.

Formation and Governance

• How are companies with charitable objects formed?

They are typically incorporated through a similar process as private limited companies, but using a special form and meeting specific requirements under the Companies Act.

• What are the governance requirements for these companies?

They need to have a Board of Directors who oversee the company’s operations and ensure adherence to its charitable objectives. Composition and responsibilities of the board might be specified in the company’s Memorandum of Association (MoA) and Articles of Association (AoA).

• How do these companies ensure their charitable goals are met?

Their MoA clearly defines their charitable objects. Additionally, they may have a separate document outlining specific programs or activities to achieve those goals.

Financial Management and Transparency

• How can these companies raise funds?

They can raise funds through various means, including donations, grants, fundraising events, and limited business activities related to their charitable objectives.

• How do they maintain financial transparency?

Companies with charitable objects are required to maintain proper accounting records and file annual reports with the Registrar of Companies (RoC). These reports may be made publicly accessible to ensure transparency.

• Do they have to pay taxes?

While generally exempt from income tax on profits used for charitable purposes, they might be liable for taxes on unrelated business income or certain fees. Consulting a tax professional is recommended.

Additional Considerations

• Do I need a lawyer to form a company with charitable objects?

While not mandatory, consulting a lawyer specializing in non-profit law can be helpful to ensure proper formation and compliance with regulations.

• Where can I find more information?

The Ministry of Corporate Affairs (MCA) website provides resources and information on Section 8 companies.