INTRODUCTION

From Old Companies Act to new many Amendments were introduced by Central Government from time to time by Notification, Amendment etc. but the concept of Non-profit making companies is quite old in India, [Under Companies Act, 1956 it was regulated by section 25 and In Companies Act, 2013 provisions related to Non profit companies are given under section 8 read with rule 19 & 20 of Companies (Incorporation) Rule, 2014.] 1

DEFINITION

Nonprofit company as the name suggest is a business to save the public goods, such as for religious, education, Charitable or other public service reasons, rather than purely for the creation of profit itself, as business aims to do, also Non-profit company are tax-free, that is why the biggest benefit of choosing this form a legal entity is that it is exempt from paying federal & state taxe on any income the company earn. [The most common tax exemption for non-profits comes from Internal Revenue Service (IRS) Code Section 501(c)(3), which is why such organizations are often called 501(c)(3) corporations.]2

UNDER CONSTITUTION

[The following laws or Constitutional Articles of the Republic of India are relevant to the NPOs: Articles 19(1)(c) and 30 of the Constitution of India, Income Tax Act, 1961, Public Trusts Acts of various states, Societies Registration Act, 1860, Section 25 of the Indian Companies Act, 1956 (Section 8 as per the new Companies Act, 2013), Foreign Contribution (Regulation) Act, 1976.]3

GOVERNANCE OF NON PROFIT COMPANIES

Non-profit companies are govern by the directorate. The size of the governing body can shift from three to 50. Each state has decide that set the base size of the load up however the specific size of the load up and the occasions that it meets every year changes starting with one association then onto the next, depending upon the requirements of the companies. Board members of nonprofits are generally not paid, but they may receive any compensation that is allowed by the organization’s bylaws. The board is responsible for the approach of the association and is given force by the associations’ Articles of Incorporation. The board’s work is facilitate by the seat and the board may put together itself into different council answerable for completing various activities.

ADMINISTRATION OF NON-PROFITS

The administration is make up of the staff that oversees all programs. Non-profit administration usually includes an executive director, or president, and office personnel. [The executive director is responsible for liaising with the board and for carrying out their instructions, as well as for overseeing the people who run the programs of the non-profit. According to a study by Texas-based consultant Convio, this type of centralized structure is the most successful for nonprofits.]4

FEATURES OF SECTION 8 COMPANIES

[Members of such company don’t give any dividend., Such company can’t be treated as a small company., Any profit or income of such company shall be used only for the promotion of its objects., A special license is required for its incorporation., Such company cannot be converted into a one-person company, No minimum share capital required for such company., Such company need not use suffix ‘Private Limited’ or ‘Limited’ with its name., Articles of Association of such company shall be amended only with the prior approval of Central Government ie., RoC., Such company shall amalgamate only with another company registered under section 8 of the Act and having similar objects.]5

EXAMPLES

Companies incorporate not for benefit under Sec 8 of the Companies Act, 2013 either as a public organization or privately own business, are consider as the best type of hierarchical system. The statutory reports and examined financials are accessible online on the public investigation. One Person Company (OPC) can’t be join as a Section 8 Company according to the provisions of the Act. The primary reason for segment 8 company is mostly for the social government assistance of the general public. Infosys Foundation, Reliance Foundation, TATA Foundation, Reliance Research Institute are a portion of the instance of Sec 8

organization enroll under the Act.

CONCLUSION

Corporate are moving towards adherence to social duty and the corporate type of non-benefit association is consider as best for charity including CSR. Non-Profit company serve the public

by providing a wide range of service to improve the quality of life of individual or communitie.

1 CS Divesh Goyal, Company Law- Article(May,05,2018)https://taxguru.in/company-law/incorporation-nonprofit-company-companies-act2013.html

2 Shopify, business encyclopedia, Non profit Corporation( feb, 04,2021) https://www.shopify.in/encyclopedia/nonprofit-corporation#:~:text=A%20nonprofit%20corporation%20is%20an,as%20businesses%20aim%20to%20do.

3 https://en.wikipedia.org/wiki/Nonprofit_organization#cite_ref-33

4 Lisa Magloff, The Typical Non-Profit Organisationa Structure (feb,06,2019) https://smallbusiness.chron.com/typical-non-profit-organizational-structure-4896.html

5 Mithun B. Shenoy, Company Law- Article,( Aug, 22, 2019) https://taxguru.in/company-law/section-8-companies-corporate-form-non-profit-organisation.html