The Companies Act defines a Section 8 company as one whose objectives is to promote fields of arts, commerce, science, research, education, sports, charity, social welfare, religion, environment protection, or other similar objectives. These companies are registered for social welfare, charity and meeting objectives of the organization towards the society at large. These companies also apply their profits towards the furtherance of their cause and do not pay any dividend to their members.

These are limited companies, which are registered under the Companies Act, and will be treated as limited companies without the phrase “limited” being added to their name. They may have been registered either as “private limited or public limited companies”.

There is no sharing of the profits among the directors which is earned by section 8 company by its business operations. It only can be utilized to meet the objective of the section 8 company.