Section 8 Company Benefits -- Why section 8 company is preferable instead of trust and society?
Section 8 companies, also known as non-profit companies, are registered under the Companies Act, of 2013, and are established for promoting charitable purposes. Here are some reasons why they may be preferable over trusts and societies:
Separate legal identity: Section 8 companies have a separate legal identity from their members, which means that they can own property, enter into contracts, and sue or be sued in their own name. This provides a level of protection to the members' personal assets.
Better credibility: Section 8 companies are registered with the Registrar of Companies, which gives them more credibility and accountability than trusts and societies. This can be important for fundraising and getting donations from abroad donors also.
Greater flexibility: Section 8 companies have greater flexibility in terms of management and governance. They can have a board of directors, which can hire staff and make decisions on behalf of the company. In contrast, trusts and societies are typically governed by a group of trustees or managing committee members.
Tax benefits: Section 8 companies are eligible for tax benefits under Section 80G of the Income Tax Act, which allows donors to claim tax deductions for donations made to the company. This can be an incentive for individuals and organizations to donate.
Overall, section 8 companies may be preferable over trusts and societies for their separate legal identity, greater credibility, flexibility, and tax benefits. However, the choice between the three will depend on the specific needs and objectives of the organization.
About the Author
Satender Saini is a corporate lawyer and intellectual property law expert with over 10 years of experience in the field. He has worked with some of the top law firms in India and has advised clients from various industries such as technology, healthcare, education, and entertainment.
He has extensive experience in all aspects of intellectual property law, including trademark registration, patent filing, copyright protection, and trade secret management. He has also advised clients on legal compliance, corporate governance, and mergers and acquisitions.
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