A Section 8 Company aims to promote science, art, commerce, sports, charitable activities, etc. Such companies are registered to work towards the promotion of the less-talked communities and sectors in India. A Section 8 Company is a Non-Governmental Organization (NGO) and one of India's most preferred forms of NGO. It is registered under the Companies Act, 2013 and hence, it has to follow the compliances prescribed under the Companies Act 2013. It is vital for Section 8 Company to follow compliances prescribed by the Government. If a company doesn’t stay updated with the Section 8 Annual Compliances, they end up paying the penalties to the Government. The Companies Act, 2013 mandates the provision for all the Section 8 Companies in India to follow the compliances with the MCA (Ministry of Corporate Affairs) strictly.
Compliances such as preparation and filing of financial returns, annual returns, etc. explain the Company's financial situation clearly. Hence, filing the Company's compliances creates the transparency of the Company's operation or actual condition.
Companies who file compliances on time have better credibility than the one who doesn’t. As a result, it’s easy for such companies to avail financial help and market credit from the concerned authority.
If you don't follow the compliances of the Company, you will get trapped into legal issues such as receiving notices from the MCA, which could further lead you into legal trouble. Hence, it's always advisable to meet the compliances on time to avoid any legal complications in the future.
Whether it is customer or vendor or supplier or the regulatory body, everybody trusts those companies who file compliances on time and are quite open about their financial detail. Such companies have better credibility; and hence, find it easy to build trust among everybody.
Finally, the biggest reason for filing compliances on time is to avoid penalties. Non-compliance could lead to several bad consequences such as company closure, confiscation of a license, or severe fines.
To take care of the Company's financial filings on an annual basis, the Section 8 Company needs to appoint an auditor mandatorily. According to section 139 of the Companies Act, 2013, every Company must inform the MCA about the auditor's appointment in the form ADT-1. The book of accounts & annual returns of the Company shall be audited by the statutory auditor who will be appointed for a period of 5 years.
Every Section 8 Company is obligated to maintain the books of accounts of the Company. The books of accounts keep the records of the filing of the annual returns, etc.
All the Section 8 Companies must maintain the statutory records in the registers. The register contains the details of members, loans and investments, and charges, etc. Further, it provides an overview of how actively the Company works every year.
Annual general body meeting is to be conducted once a year within six months of the end of Financial Year & other board meetings have to be conducted.
Director's report is the document that consists of the info regarding the Company and its compliance along with a set of financial, accounting, and corporate social responsibilities. The Board of Directors is responsible for producing this report. As per the provisions of the Companies Act, 2013, producing a director's report is compulsory compliance for every Section 8 Company in India.
The Company's financial statement consists of the balance sheet, cash flow statement, profit & loss of the Company and more. Hence, every Company is supposed to prepare the financial statements of the preceding financial year mandatorily.
Every Section 8 Company must file income tax returns before or by 30th September of the next financial year. It is necessary to file income tax returns because it gives an overview of the Company's total income.
Every Section 8 Company needs to file a copy of the financial statements in the prescribed format, i.e. in the e-form AOC-4. The financial statement must be filed within thirty days from the date of the last annual general meeting held.
Since Section 8 Companies are registered as limited companies, they also need to file Form MGT-7 with the ROC for filing the Company's annual returns. MGT-7 must be filed within sixty days from the date of the last annual general meeting.