THE ULTIMATE GUIDE TO SECTION 8 COMPANY ANNUAL COMPLIANCE

Before we proceed towards Annual Compliance of a section 8 Company, let’s understand the basic meaning of section 8 Company. So any non-profit organizations/charitable organizations now can be registered as a Section 8 Company in India as per the Companies Act 2013. Section 8 Company can be registered as a private limited or as a public limited company and has in its object the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other object.

The Bengal Home Industries Association (BHIA), which was India's first NGO, was indeed founded by Sri Gaganendranath Tagore, the nephew of Rabindranath Tagore, in the year 1917.

The BHIA was established with the aim of supporting and promoting the welfare of weavers and artists involved in the handloom industry in Kolkata (formerly known as Calcutta), played a significant role in providing assistance, training, and economic opportunities to the local artisans and weavers, helping to preserve and promote their traditional crafts.

KEY FEATURES OF SECTION 8 COMPANY:

• The minimum number of directors can be 2 or 3 depending on the type of company i.e. private or public respectively.

• Can enjoy all the privileges and be subject to all the obligations of a limited company.

• A firm can be a member of a section 8 company.

• Can use its profits/income in promoting its objects only.

• Payment of dividends to its members is prohibited.

• It cannot alter its memorandum except with the approval of the Central Government.

• Not required to add the word "limited" or private "limited" to its name necessarily.

ANNUAL COMPLIANCE OF SECTION 8 COMPANY:

   

1. APPOINTMENT OF AUDITOR- As per the provisions of section 139 of The Companies Act 2013, mandatory to appoint an auditor in a company whether it is a public, private, or section 8 company, auditor to be appointed within a period of 30 days from the date of its incorporation and also required to file form ADT-1(Information for appointment of Auditor) to the Registrar of the Companies within 15 days of the appointment of auditor along with such fees as may be prescribed under The Companies Act 2013.

2. MAINTAIN STATUTORY REGISTERS- As every company is required to maintain statutory registers. The Companies Act, 2013 specifies that section 8 Company is also required to maintain its proper records in the separate registers such as the register of the company, register of members, register of loans, register of charges, etc. maintenance of separate register makes the compliance easy for all and helpful in safeguarding the companies from heavy penalties which may occur if proper compliance has not been complied with.

3. MEETING OF DIRECTORS AND SHAREHOLDERS- Board of the Directors of the company should meet to discuss the performance of the company, review the business, to decide future strategy, etc. and it is also equally important for directors to meet the shareholders of the company to establish healthy communication with them about the company, As per section 173 of The Companies Act, 2013 section 8 Company shall hold at least one Board Meeting within every six calendar month and the gap between two board meetings is not less than 90 days. And also the Annual General Meeting of its members within a period of 6 months from the end of its financial year.

4. PREPARATION OF DIRECTOR'S REPORT- Director Report refers to a report where the director of the company discloses the relevant financial as well as non-financial position of the company to its shareholders. Every company including section 8 Company is required to prepare a Board Report as per section 134 of The Companies Act 2013.

5. FILLING OF INCOME TAX RETURNS- Income tax return is a form submitted to the income tax department of India, containing details about the income of the person/entity and tax to be paid on such income by any person/entity. Section 8 Company is also required to file its income tax return in form ITR-7 on or before 30^th September every year.

6. MAINTAIN STATUTORY BOOKS OF ACCOUNTS- As per section 128 of The Companies Act 2013, Every Company is required to maintain its proper Books of Accounts at its registered office or such other place as may be prescribed which must give a true and fair view, prepared as per double entry system and accrual basis. Books of accounts comprise of the profit and loss account, balance sheet, cash flow statement, etc.

7. FILLING OF FINANCIAL STATEMENTS AND ANNUAL RETURN- section 8 Company is required to file AOC-4 (Form for Annual filing the financial statement and other documents with the Registrar) and form MGT-7 (Form for filing annual return by a company) with the Registrar of the Companies, within 30 days and 60 days from the date of its annual general meeting respectively. Normally all Annual 

FREQUENTLY ASKED QUESTIONS:

Who can incorporate a section 8 company?

Any person or association of persons can apply for incorporation of section 8 Company in India.

Are there any exemptions given to section 8 Company?

Yes, there are some exemptions given to section 8 Company such as:

• The concept of independent director does not apply to section 8 company.

• It can give notice of 14 clear days for the annual general meeting instead of 21 days.

• It does not require to have a nomination and remuneration committee and stakeholders relationship committee.

• It can have an audit committee without independent directors.

Can a section 8 company be converted into any other type of company after its incorporation?

Yes, it can be converted into any other type of company including (OPC) after complying with all the provisions mentioned in The Companies Act 2013.

Are the provisions of corporate social responsibility applicable to section 8 Company?

Yes, the concept of corporate social responsibility (CSR) applies to section 8 company too and also mandatory to file CSR-1 with MCA. 

Can a foreign company be registered as a section 8 company in India?

Yes, a foreign company can be registered as a section 8 company in India.

Can any existing company convert itself into a section 8 company?

Yes, Any Trust, Society can be easily converted into Section-8 Company including any private and public company can also convert itself into a section 8 company but One Person Company (OPC) is prohibited to do so.

What is the tax rate applicable to section 8 Company?

In the same way, other companies pay tax on their profit, section 8 company is also liable to pay tax at the rate of 30%. But numerous tax exemptions have been given to section 8 Company, If the Section 8 Company having 12AA Registration in India, the tax is exempted.

HOW CAN COMPLIANCE CALENDAR HELP?

Now, you are aware of the long list of section 8 Company compliance. Are you worried about? Well, you don't have to worry as all the hectic compliance for your section 8 Company can be handled by the compliance team of compliance calendar LLP. We are here to provide you with detailed knowledge about the compliance framework and to safeguard you from heavy penalties. We can assist you with the preparation of your financial statements and other records, registers, etc. also with the submission of MCA annual returns and income tax filings.

Get in touch with our team to get all your queries resolved. Our expert team will assist you within 24 hours. You can reach us at +91-9988424211 via call/message or email us your queries at info@ccoffice.in