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Section 8 Company Compliance

The purpose of starting Section 8 Company is to encourage, promote, and sustain activities related to art, science, commerce, sports, charitable activities, and so on. Section 8 Company can be fall under a Non-Governmental Organization. Annual compliance for Section 8 Company can be hassle-free with Ritedger.

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Overview
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Section 8 Company Compliance - Overview

According to Companies Act, 2013, it is mandatory to all the Section 8 Company Companies to file the Section 8 Compliance with the MCA or Ministry of Corporate Affairs. The main aim to start Section 8 Company is to encourage, promote, and nourish the activities related to science, art, sports, charitable activities, commerce, and so on. Section 8 Companies fall under the Non-Governmental Organization category. These companies enjoy being treated as ‘Limited Company’, via, word ‘Limited’ but it is not added at the end of the name of the company. In short, Section 8 companies work with the objective to promote the needy sectors and communities in India. These Companies are not applicable to provide income or dividend to its partners or members.

The Advantages of Section 8 Company Compliance

Provides the company better credibility or trustworthy

Help the company in eluding penalties and punishments

Protects the company from all types of legal trouble

Work with the objective to form trust among its customers

List of documents needed for Annual Compliances of Section 8 Company
  • Article of Association of the company
  • Memorandum of Association of the company
  • DSC or Digital Signature Certificate
  • Certificate of Incorporation of Section 8 Company
List of documents needed for Annual Compliances of Section 8 Company

Appointment Of Auditor

It is mandatory for a Section 8 company to place an auditor to check and maintain their financial recordings and statements every year.

Conduct Board Meeting

Board meeting of the company should be conducted twice a year and the gap between the two board meetings should not be more than 3 months or 90 days.

Income Tax Return Filing

Section 8 company are needed to file for IT Returns on or before 30th September of the preceding fiscal year. In order to give complete details of the company’s income, and it is mandatory to file for Income Tax return for the company. In case, the company is registered under Section 12A and 80G, then it can use the advantage of tax exemption.

Filing Of Financial Return With RoC

E-form AOC-4 is used to submit the copy of financial reports and statements. It has to be filed within a month or 30 days from the date on which the annual general meeting is conducted.

Conduct An Annual General Meeting

Annual General Meeting of this type of Company should be conducted yearly on or before 30th September. It is mandatory for all the directors, shareholders, members, and auditors to be present in the meeting. The formal notice regarding the meeting has to be sent all concerned members within 21days notice. Form MGT-15 is used to file the report of the Annual General Meeting and has to be submitted within a month or 30 days of conducting the meeting.

Filing Of Annual Return With RoC

Form MGT-7 is a form which has to be file the annual return of the section 8 company. The annual return has to be filed within 60 days from the date of the Annual General Meeting is held. If there is no Annual General Meeting is held in a year, then the yearly return should be recorded within sixty days from the time period or days on which the yearly General Meeting should have been held and it is 30 September.

Due Dates for filing Section 8 Company Compliances

If the company fail to compile the annual return, it can lead to a penalty, hence the best way to ignore penalty, the Section 8 company has to follow the compliances within the prescribed period of time.

COMPLIANCE: AGM Or Annual General Meeting
DUE DATE: 30thSeptember of every year
COMPLIANCE: AOC-4
DUE DATE: Within 30 days of the Annual General Meeting
COMPLIANCE: MGT-7
DUE DATE: Within 60 days of the Annual General Meeting
COMPLIANCE: Income Tax Return
DUE DATE: 30thSeptember of every year
Event-based Annual Compliances of Section 8 Company

Event-based, as the name advocates, the compliances should be about the event of explicit
occasions of the company. These types of compliances are said to be non-periodical in nature.

  • Transaction details of shares of the company
  • Allotment of shares of the company
  • Details about the Appointment or Resignation of Directors
  • Details of the Appointment or Resignation of Auditors
  • If any modification in the company’s name
  • If any modification in company’s MOA
  • Information about the appointment of Key Managerial Personnel
  • The share application money receipts
  • Any modification in the company’s structure
Income tax Compliance for Section 8 Companies

Section 8 Company is bound to give corporate tax as per the Income Tax Act. But by including
certain measures the Section 8 Company can keep under the exemption from the income tax.
To enjoy such exemptions Section 8 Company is required to fulfil the mentioned below
compliances:

  • Section 8 companies should be registered under Section 12A of the Income Tax Act,using form 10A with the Principal Commissioner.
  • It must follow the conditions as per Section 11 if the company wants to come under the eligibility for the exemption criteria.
  • Section 80G should approve the company using Form 10B.
  • Penalties for Non-Compliance
  • The Ministry of Corporate Affairs is the authorized government body to impose certain penalties
  • if the company fails to file the animal return or any non-compliance with the following procedures.
  • The Central Government may deny the permission allowed to the company on the off chance that it detects that the company is working incorrectly or in a violating way to the object of the company
  • The companies will be blamable with fine, which will be around ten lakh rupees to one crore rupees.
  • The directors and each official members of the company who is in default will be blameable with detention for a term which may extend to 25 lakh rupees or with both.
  • In case, if it is discovered that the issues of the company were directed falsely, every individual or officials in default will be at risk for action under area 447.

Frequently Asked Questions

Inability to file Annual Returns is punishable with a penalty of Rs 50,000 which may extend to 5 lakh.
As the Foreign Contribution and Regulation Act, 2010, a Section 8 Company must compile special requirements to receive any funds or contributions or donations from overseas or from outside India.
Yes. as per Section 8(1) of the Companies Act, 2013 it allows person or association of persons to be registered as a Section 8 Company on satisfying of certain terms and procedure as prescribed therein.
As per the section 149(1) of Companies Act 2013, it should hold Minimum of two directors for a private limited company and three directors for a public limited company and maximum of fifteen directors but it is not applicable to section 8 company and therefore there is no prescription with respect to the minimum and the maximum number of directors in a section 8 Company.
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