A business is referred to as a Section 8 Company because it is registered as a Non-Profit Organization (NPO), i.e. when it has the goal of supporting arts, commerce, education, charity, environmental conservation, sports, science, research, social welfare, religion, and aims to use its earnings (if any) or other revenue to accomplish these goals.

The profits of a NPO cannot be used to shell out dividends to the company's owners and must instead be used to support humanitarian purposes. The central government grants such corporations an incorporation certificate, and they are expected to obey the government's laws.

Failure to comply with the Central Government's specified obligations may result in the business being wound up on government orders, according to the law. Furthermore, if the company's targets are shown to be bogus, stern disciplinary action would be taken against all employees of the company.

Its activity is equivalent to that of any other limited partnership, and its rights and responsibilities are similar to those of a limited company and a NPO.