A Section 8 company in India is a non-profit organization recognized under the Companies Act, 2013. These organizations are set up to promote social welfare, arts, commerce, education, charity, environmental protection, sports, science, and research. Unlike for-profit companies, Section 8 companies use their profits to further their objectives rather than distributing them as dividends. While they enjoy certain exemptions and benefits, Section 8 companies must adhere to various compliance requirements, including auditing. This article provides a comprehensive overview of the compliance obligations of Section 8 company Registration, particularly focusing on audit requirements.
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A Section 8 company is a distinct non-profit entity under the Companies Act, 2013, dedicated to promoting social causes. These companies, reflecting their non-profit nature, are exempt from including the term “Limited” in their name. The profits and income generated by Section 8 companies are solely used to promote their objectives. Additionally, they often benefit from exemptions under the Companies Act, Income Tax Act, and other regulations.
Section 8 Company Registration involves adhering to a set of legal obligations and regulatory requirements to maintain their non-profit status under the Companies Act, 2013. These requirements are categorized into event-based, time-based, and specific criteria-based compliances.
Event-Based Compliances: These are triggered by specific events within the company.
Time-Based Compliance: These routine compliances need to be finished on a quarterly, half-yearly, or annual basis.
Particular Criteria-Based Compliance: According to certain requirements, such as the company’s paid-up share capital, turnover, or other circumstances, certain compliances are necessary.
Section 8 companies in India are those incorporated for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment, or any such other object. They are required to comply with several legal and regulatory requirements.
Form ADT-1 is used to notify the Registrar of Companies (RoC) about the appointment of an auditor. Within fifteen days of the appointment, this form needs to be submitted. It Ensures that the company’s financial statements are audited by a qualified professional.
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Companies covered by Section 8 are required to keep accurate and current books of accounts. Facilitates transparency and accuracy in financial reporting and ensures all financial transactions are recorded properly.
Requirements:
Companies under Section 8 must keep a number of statutory registers. It Ensures compliance with legal requirements and keeps track of the company’s statutory obligations.
Companies must prepare financial statements that include the balance sheet, profit and loss account, cash flow statement, and notes to accounts. It Provides a comprehensive view of the company’s financial performance and position.
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Companies under Section 8 must keep a number of statutory registers. It ensures compliance with the Income Tax Act, 1961, and helps in the assessment of the company’s tax liabilities.
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Form AOC-4 is used to file the company’s financial statements with the RoC. It ensures that the company’s financial information is publicly available and complies with the disclosure requirements of the Companies Act.
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Form MGT-7 is used to file the annual return of a company with the RoC.
Provides details about the company’s directors, shareholders, indebtedness, and other key information.
Requirements:
By adhering to this compliance checklist, Section 8 Registration can ensure that the Section 8 companies operate within the legal framework set forth by the Companies Act, 2013, and maintain their status as entities dedicated to social welfare and public good.
Under Section 139 of the Companies Act, 2013, every Section 8 company must appoint an auditor to audit the company’s annual financial statements. The details of the auditor’s appointment must be communicated to the Ministry of Corporate Affairs (MCA) using Form ADT-1 within 15 days of the company’s Annual General Meeting (AGM). Non-compliance can result in penalties.
Section 8 companies must maintain a statutory register, which documents critical aspects of the company’s operations and governance, including:
Section 8 companies are required to hold various meetings:
The Directors of a Section 8 company must prepare a comprehensive report covering compliance information, CSR activities (if applicable), accounting details, and other relevant information. This report is filed along with Form AOC-4.
Annual compliance includes preparing and submitting financial statements such as:
These financial statements must be filed with the Registrar of Companies (ROC) and audited by the appointed auditor.
The AOC-4 Form is used to submit annual financial statements within 30 days from the AGM date. Failure to comply results in penalties.
Annual returns must be filed using Form MGT-7 within 60 days from the AGM date. Non-compliance leads to penalties.
Section 8 companies must file their income tax returns by September 30th each financial year. If registered under Sections 12A and 80G, they may qualify for exemptions.
Essential documents for compliance include:
Non-compliance can lead to severe penalties:
Annual compliance requirements for Section 8 companies are not just legal necessities but also a means to leverage benefits associated with their status. By following these regulations diligently, Section 8 companies can avoid stringent penalties, ensuring their continued operation and contribution to their social objectives.
LegalRaasta simplifies Section 8 company Registration. Our professionals make sure your Section 8 Registration complies with all laws and guidelines pertaining to the Companies Act of 2013. We take care of everything—from filling out the required paperwork to keeping track of things and creating financial statements—so you can focus on your philanthropic endeavours. With our assistance, you can stay in compliance and avoid fines. Get in touch with our experts today for seamless Section 8 company compliance!