Overview of Section 8 Company Compliance

The Companies Act, 2013 has made it mandatory for all the Section 8 Company Companies to adhere to Section 8 Compliance with the MCA (Ministry of Corporate Affairs).

The purpose of forming Section 8 Company is to promote, encourage, and nourish activities related to art, science, sports, commerce, charitable activities, etc. Section 8 Company  categorized as a Non-Governmental Organization. These companies enjoy the liberty of  treated as ‘Limited Company’, though, word ‘Limited’ is not added at the end of their names. Concisely, Section 8 companies  work in the direction of promoting needy communities and sectors in India. These Companies are not liable to give income or dividend to its members.

                     Benefits of Section 8 Company Compliance

Documents Required for Annual Compliances of Section 8 Company

                           List of mandatory Section 8 company compliances

• • • • • • • • • • • • • • Appointment Of Auditor: It is so compulsory for a Section 8 company to appoint an auditor to take care of their financial recordings every year.
                          • Maintaining Registers: Maintaining statutory records in registers is expected from Section 8 companies. These registers are maintain on a year basis and the purpose of these registers is to check how the company has perform annually. Information related to members, loans, charges and investment is provide in the register.
                          • Maintenance Of Financial Statements: Financial records of a Section 8 Company are maintain on an annual basis. Once the financial records are prepare they are presented in the front of the registrar. But Financial records consist of the following information:
                          • Preparing Director’s Report: Section 134 of the Companies Act, 2013 says that Form AOC-4 is need  to file the Director’s Report. The purpose of preparing a Director’s Report is to give so shareholders a preview of the financial position of the company and the scope of its business. The sign ‘minutes of meetings’ is require to maintain at the Register Office.
                          • Income Tax Return Filing: Section 8 company are require to file for Income Tax Returns on or before 30th September of the next fiscal year. In order to give complete overview of the company’s income it is so essential to file for Income Tax return. But if the company is register under Section 12A and 80G it avail the benefit of tax exemption.
• Conduct Board Meeting: Board meeting of every company  held twice a year in case of small companies. The gap between the two meetings more than 90 days.
• Conduct Annual General Meeting: Annual General Meeting of the Section 8 Company yearly on or before 30th September. It is necessary for all the directors, members, and auditors to attend the meeting. Because The  notice regarding the meeting by giving not less than 21days notice. Form MGT-15 is used to submit the report of Annual General Meeting. And The report submitt within 30 days of conducting the meeting.

             Event-based Annual Compliances of Section 8 Company

Event based, as the name recommends, are the compliances  document on the event of explicit occasions. In contrast to annual compliances, these are non-periodical in nature.

Checklist For Event-Based Compliances For Section 8 Company:

1. Transfer of shares
2. Appointment/Resignation of Directors
3. Appointment/Resignation of Auditors
4. Modification in company’s name
5. Modification in company’s MOA
6. Appointment of Key Managerial Personnel
7. Receipt of share application money
8. Any alteration in the company’s structure

                             Tax Compliance for Section 8 Companies

Section Company is bound to pay corporate tax as mention in the Income Tax Act. But by adopting certain measures the Company  exempt its certain income from the income tax. To entertain such exemptions Section 8 Company need to fulfil the following compliances:

1. Section 8 companies  register under Section 12A of the Income Tax Act, with the Principal Commissioner using form 10A.
2. It  adhere to the conditions mention in the Section 11 if the company wants to fall under the criteria of eligibility for the exemption.
3. Section 80G approve the company through Form 10B.

                           Penalties to be charge in case of Non-Compliance

The Ministry of Corporate Affairs has the authority to impose certain penalties in case it encounters any non-compliance with the procedures.

Penalties to be impose are as follows:

• The Central Government  disavow the permit allow to the organization on the off chance that it finds that the organization is working false or in a way violative to the object of the organization.
• The organizations will be culpable with fine, but which will not be under ten lakh rupees and stretched out to one crore rupees.
• The chiefs and each official of the organization who is in default will be culpable with detainment for a term which stretch out to twenty-five lakh rupees or with both.
• In the event that it is discover that the issues of the organization were direct false, every official in default will be at risk for activity under area 447.

                       Due Dates for filling Section 8 Company Compliances

Non-compliance lead to penalty and for the Section 8 Company the best way to ignore penalty is quite smooth, and all the company has to do is follow the compliances within the stipulated period of time.

Note: The aforementioned Fees is so exclusive of GST.