Overview of Section 8 Company Compliance

According to the Companies Act, 2013 it is mandatory for all the Section 8 Company Companies to follow Section 8 Compliance with the MCA (Ministry of Corporate Affairs). The information on Annual Compliance for Section 8 Company can expand your understanding and avail the benefits allowed by the government of India along with many other advantages. 

The aim of creating Section 8 Company is to promote, encourage, and nourish activities concerning art, science, sports, commerce, charitable activities, etc. Section 8 Company is categorized as a Non-Governmental Organization. These have the liberty of being treated as ‘Limited Company’, but the word ‘Limited’ is not added in the end.

Section 8 companies work towards promoting needy communities and sectors in the country. There is no need to give income/dividends to its members. These companies are registered with the purpose to promote underprivileged populations and industries in the country. Section 8 company annual compliance is necessary to abide by the varied laws. 

Mandatory Annual Compliance for Section 8 Company

Section 8 Company Compliance needs to consider the following:

  • Appointment of Auditor

It is compulsory for a Section 8 company to hire an auditor who takes care of their financial recordings every year.

  • Maintaining Registers

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Section 8 companies are supposed to maintain statutory records. The registers have to be maintained every year and through these statements, the company’s annual performance can also be checked. Through registers, information concerning members, investments, loans, and charges, can be checked.

 

  • Maintenance of Financial Statements

Financial records of a Section 8 Company needs to be maintained annually. Post the successful creation of financial records, they must be presented in front of the registrar. The financial records include the Trading Account, Balance sheet, and Profit and Loss Account.

  • Preparing Director’s Report

As per Section 134 of the Companies Act, Form AOC-4 is required to file the Director’s Report. By preparing a Director’s Report, the shareholders can get an idea about the financial position of the company and how beneficial it will to do business with the particular company.

  • Income Tax Return Filing

Section 8 company is supposed to file Income Tax Returns on or before 30th September of the next fiscal year. To provide a complete overview of the company’s income, filing an Income Tax return is mandatory. But in case the company is registered under Section 12A and 80G, it can enjoy tax exemption benefits.

  • Conduct Board Meetings

Board meetings of every company must be conducted twice a year if it is a small-size company. The gap between the two meetings must not be more than 90 days.

  • Conduct Annual General Meeting

Annual General Meeting of the Section 8 Company needs to be held yearly on or before 30th September. All the directors, members, and auditors are supposed to attend this meeting and must be notified at least 21 days in advance. Form MGT-15 is used for submitting the report of the Annual General Meeting and the same report needs to be submitted within 30 days of conducting the meeting.

  • Filing of Financial Return with RoC

E-form AOC-4 is used to file the copy of financial statements and must be filed within 30 days from the date on which the annual general meeting for annual compliance for section 8 company is held.

Annual Compliances of Section 8 Company - Documentation

Below Documents is Required for Annual Compliances of Section 8 Company:

Memorandum of Association

Article of Association

DSC

Certificate of Incorporation

Benefits of annual compliance for section 8 company

Increases the credibility of the company

Builds trust

Helps avoid legal complications

Avoid paying penalties

Checklist for Annual Compliance for Section 8 company

Filing ADT-1 (Appointment of Auditor)

Books of Accounts Maintenance

Statutory Registers Maintenance

Convening meetings

Report of directors

Financial statements preparation

Filing of Income Tax returns

Financial statements filing (AOC -4)

Annual returns with ROC filing, MGT -7

Annual Compliance for Section 8 Company
About the Penalties For Non-Compliance

In case it is found that a particular company is operating dishonestly or against its stated goals, the Central Government owns the right to cancel the license it has granted to the company. The fines levied against the companies must be less than 10 lakhs and cannot exceed 1 crore.

The directors and every officer of the company who is in default have to pay both, monetary fines and imprisonment maximum of upto 25 lakhs.

Due Dates for Filling Section 8 Company Compliances

Non-compliance results in a penalty. So the Section 8 Company must follow all the compliances within the stipulated period of time.

Below are the compliances to be taken care of:

DESCRIPTION OF COMPLIANCES

DUE DATE

AGM (Annual General Meeting)

30thSeptember

AOC-4

Within 30 days of AGM

MGT-7

Within 60 days of AGM

Income Tax Return

30th September

Thus, similar to other necessities, mandatory compliance for section 8 company is also obligatory. It is better to seek assistance of professionals instead of missing the timely filing of compliances. 

We are the one-stop destination for company registration, compliance, and other business solutions. You can hire Valcus Pvt. Ltd. team for section 8 company annual compliances and other services in Delhi, India.