The Companies Act of 2013 requires all Section 8 companies operating in India to adhere to certain regulations.
The main goal of Section 8 Company is to Promote science, the arts, business, sports, philanthropic endeavors, etc. Generally Section 8 Companies are registered to promote underrepresented populations and industries in India and one of India's most popular types of Non-Governmental Organization (NGO) is a Section 8 Company.
The Companies Act, 2013 requires all Section 8 companies operating in India to adhere to certain rules and regulations as outlined below.
Following are the benefits of following Section 8 Annual Compliances:
The Company's financial status is explained in detail by compliances including the creation and submission of financial returns and annual returns. Therefore, by filing the Company's compliances, the Company's operation or actual situation become transparent.
Companies with timely compliance filings are seen as more reliable than those without. Therefore, it is simple for such businesses to obtain financial assistance and market credit from the relevant authority.
If you don't adhere to the Company's compliance policies, you could end up in legal difficulty later on after receiving letters from the MCA, for example. Therefore, it's always essential to comply with the requirements on time to avoid any legal is sues down the road.
Whether it's a consumer, a vendor, a supplier, or a regulatory body, everyone has faith in businesses that submit compliances on time and are completely transparent with their financial information. Because they have greater credibility, these businesses find it simple to win over everyone's trust.
The primary justification for submitting compliances on time is, of course, to avoid penalties. Failure to comply could have a number of negative effects, including business closure, license confiscation, or hefty fines.
The Section 8 Company is required by law to appoint an auditor to handle the Company's yearly financial filings. Section 139 of the Companies Act of 2013 mandates that each Company submit Form ADT-1 to the MCA notifying it of the appointment of the auditor. The statutory auditor, who will be hired for a term of 5 years, will audit the company's books of accounts and annual reports.
The Company's books of accounts must be kept up to date by every Section 8 Company. Records of the submission of annual returns and other documents are kept in the books of accounts.
The statutory records must be kept in the registers by all Section 8 Companies. The register includes information about members, loans, investments, fees, etc. Additionally, it gives a general summary of how actively the Company operates each year.
Every year, within six months after the end of the fiscal year, there must be an annual general body meeting and additional board meetings.
The Director's Report is a document that details the Company's compliance with a number of financial, accounting, and corporate social obligations. This report is the responsibility of the Board of Directors. Producing a director's report is a requirement for every Section 8company in India under the terms of the 2013 Companies Act.
The balance sheet, cash flow statement, profit & loss of the Company, and more are included in the financial statement of the Company. As a result, it is mandatory for every Company to compile the financial statements for the previous fiscal year.
Before or by September 30th of the next fiscal year, Section8 Companies must file their income tax reports. The purpose of filing income tax returns is to provide a summary of the Company's total income.
A copy of the financial statements in the required format, i.e., the e-form AOC-4, must be filed by each Section 8 Company. Within thirty days after the date of the most recent annual general meeting, the financial statement must be filed.
Section 8 Corporations must additionally submit Form MGT-7 to the ROC for filing the Company's annual returns because they are registered as limited companies. Within sixty days of the most recent annual general meeting, MGT-7 must be submitted.
As the name implies, event-based compliances are those that must be reported when particular events take place. These are non-periodic compliances, as opposed to annual compliances. The following is the Section 8Company's event-based compliance check list:
Follow the compliances within the allotted period in order to avoid penalty and fee for non-compliance for Section 8 Company.
The deadlines for Section 8 Company compliance are listed below:
In the event that any procedure is not followed, the Ministry of Corporate Affairs has the authority to apply certain fines. The following are the potential penalties:
Que: Who may submit an application to register a Section 8 company?
Ans - Any individual or group of individuals may submit an application for a section 8 company registration as long as they: The company's mission is to further the values of the arts, sciences, research, culture, education, and general social welfare. Following incorporation, the business invests its earnings in advancing its goals. The business does not provide shares or dividends to its shareholders.
Que: Who grants a Section 8 company's licence?
Ans - The licence for a Section 8 company may only be issued by the Registrars of Companies of the relevant jurisdictions with permission from the Central government.
Que: Can a One Person Company (OPC) be registered or transformed into a Section 8 Company?
Ans - No. OPC cannot be incorporated or changed into a Section 8 company under the Companies Incorporation (Rules), 2014 regulations.
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