Can a foreign company be incorporated as a section 8 company?
No. A foreign company is a body incorporated outside India that has a place of business in India. A section 8 company is incorporated in India, with a licence, for objects such as charity, education, science, sports, or social welfare. Opening an office in India does not convert the foreign body into a section 8 company.
No. A place of business in India makes the overseas body a foreign company under section 2(42). It does not incorporate it under section 8.
Why is the answer no?
Incorporation under section 8 is a new Indian company. The Registrar issues the licence and the certificate together. The name need not end in Limited or Private Limited. The steps, the objects, and the bar on dividends are on the section 8 page. A foreign company that only has a place of business here files as a foreign company. It is not issued a section 8 licence in place of its overseas incorporation.
Can a foreign person subscribe?
A person resident outside India, or a foreign body, may be a subscriber to an Indian section 8 company only where the foreign-exchange rules allow that investment in that activity. The company that results is still an Indian company. The licence is not a permission to invest, and it is not a statement that every charitable object is on the automatic route.
A wholly owned subsidiary and a joint venture are ordinary company structures. They are not section 8 companies unless the objects and the licence say so.
What must the Indian company still do?
Apply its profits to the objects. It does not pay a dividend. There is no minimum paid-up capital set by section 8 itself. It still keeps accounts, has them audited, and files the annual forms. The calendar is on the section 8 compliance page. If it pays a dividend or drops the objects, the licence can be revoked and the omitted word Limited or Private Limited is added back to the name.
Does the licence give an income-tax exemption?
No. Registration under section 12A, and approval under section 80G, are separate applications to the income-tax authority. A section 8 company that claims the charitable exemption files ITR-7. The licence does not file that return by itself.
Frequently asked questions
Four questions cover a branch office, foreign investment, 12A and 80G, and a dividend.
Is a branch or liaison office a section 8 company?
No. A place of business in India makes the overseas body a foreign company under section 2(42). It does not incorporate it under section 8.
Does a section 8 object mean investment is automatic?
No. Whether a person resident outside India may subscribe depends on the foreign-exchange rules for that activity. The licence does not replace that permission.
Do 12A and 80G follow from the licence?
No. Those are income-tax registrations, applied for separately. The section 8 licence does not grant them.
Can the company pay a dividend to a foreign subscriber?
No. Profits are applied to the objects. A dividend is a ground for revoking the licence, whoever the member is.
Sources
A foreign company is section 2(42). A section 8 company is incorporated in India under a licence.