Section 8 Company Compliance

As a Section 8 company, you have a unique set of regulations and best practices that you need to follow to ensure compliance. These regulations are in place to protect your organization, your stakeholders, and your beneficiaries. 

However, staying compliant can be a tough task, especially if you're new to the world of Section 8 companies. That's where this guide comes in. 

We've put together a comprehensive resource that covers everything you need to know about Section 8 company regulations and best practices. From understanding the Section 8 company registration process to maintaining compliance with the Companies Act, we've got you covered.

So, whether you're a seasoned Section 8 company or just starting out, this guide will help you navigate the complex world of regulations and best practices with ease. 

What is Section 8 Company?

In our country, a Section 8 company is a non-profit organisation that has the purpose of promoting science, commerce, social welfare, and research, as well as environmental preservation. With authorization, you may run your business and amass profits. However, you cannot divide the same amongst the members of your firm. 

Every Section 8 company is required to carry out the annual compliance activities outlined under the Companies Act of 2013 and the Income Tax Act of 1961. This protects the company's credibility and trustworthiness while avoiding fines for noncompliance. For instance, compliance duties that must be completed throughout the year might be tedious or painstaking. Nonetheless, in cases of non-compliance, it might lead to heavy penalties, challenging the director’s position in the firm. 

Corpseed's yearly compliance package for Section 8 Companies guarantees that these responsibilities are handled by specialists for you. It saves you time and energy, allowing you to focus on the company's essential tasks.

Annual compliance Section 8 companies 

It is mandatory for all Section 8 companies to file annual compliance and other tax-related returns. Failing will lead to heavy penalties for your Company in the Defaulter list of ROC.  The next step is to understand the key features for the annual compliance for Section 8 Company:

• Maintain Accounts and Prepare financial statements: - The Company is required to have statutory registers, including records of loans acquired, and incurred charges.   
• Annual returns: - The annual returns should have information and details, such as about management, and stakeholder details to be filed in Form MGT-7 with the Registrar of Companies (ROC), within 60 days of the annual general meeting.
• Income tax return: - The income tax return has to be filed each year on or before the 30th of September.
• Annual General Meeting: - Annual general meeting is conducted once a year within 6 months of the end of the financial year along with other board meetings. 
• Appointment of Auditor: - It is said that as per Section 139, it is essential for the Companies Act to appoint an auditor. It requires the existence of a statutory auditor, who would audit the book of accounts or annual audits of the company, as per this tenure till 5 years. 
• Filing Financial Statement: - The financial statement needs to be filed in a form (E-FORM AOC-4), following 30 days from the date of the announcement of the annual general meeting.

As a non-profit organisation aiming for social welfare or creating a positive impact, section 8 company registration  is imbued with significant benefits as stated below-

• Tax exemptions

One of the famous benefits of Section 8 company compliance is tax exemption. Companies falling under this category are exempted from income tax costs of surplus incomes, conforming to the organization’s objectives. These exemptions grant you more resources for activities and can impact the community as a whole. For instance, all those who make contributions to your organisation become eligible for tax benefits increasing their likelihood of supporting you.

• Avoiding Penalties

Section 8 Company compliance helps you avoid the penalties. However, in case of non-compliance, it has a negative impact on the license being revoked, confiscated or leading to shut down of the establishment. 

• Legal Compliance & Regulation

Section 8 Company Compliance ensures that your company is compliant with the legal framework. The very existence of compliance acts as a testament that you uphold the commitment to practising ethical practices and abide by the legal declaration. Compliance helps you gain enough credibility and recognition amongst beneficiaries and sponsors. Isnt’that exciting? 

I am sure it is. 

In total, Section 8 company compliance makes you believe that you abide by your mission and strive for a greater impact in the community. 

• Access to Funding

Section 8 Company Compliance is how you become the recipient of funding opportunities from government or non-governmental organizations. Compliance makes it possible for you to fetch limitless chances in seeking funding, expanding the reach and striving for innovative solutions.  It plays a crucial role in encouraging your organization’s influence as well as impact. 

Therefore, Section 8 of company compliance comes with endless benefits, including tax exemptions, legal compliance, and access to funding, which contribute to increasing the ability to make a positive impact in the community.

The company compliance checklist is composed of the following must-haves which are as follows- 

• Form ADT-1, Appointment of Auditor, must be submitted
• Maintaining account books
• Keeping Statutory Registers 
• Financial statement preparation
• Filing income tax returns
• Financial statements (AOC-4)
• MGT-7, Annual returns to be filed with Registrar of Companies 
• Annual Section 8 Compliance 

The documents required for Section 8 company compliance are extremely crucial, without which you cannot operate. Nonetheless, the following are needed documents mentioned below-

• Articles of Association
• Memorandum of Association
• Digital Signature Certificate 
• Company Incorporation Certificate

In today’s business, transparency and accountability are quite a few factors, which have become essential in establishing credibility and trustworthiness. For firms to make a positive impact on society, one ought to adhere to the Section 8 Compliance. Besides, let us look at how corpseed guides you in the process of requesting Section 8 Company Compliance. Let us have a Look

Step 1: Corpseed received your request for Section 8 Company Compliance

Step 2: We will assign a dedicated professional who is skilled enough to help you maintain compliance for your Section 8 Company. You can get in touch with the assigned resource at any point in time for consultation and assistance regarding annual Compliance throughout your journey with Corpseed.

Step 3: Our resource will help your Section 8 Company to maintain accounts and prepare the financial statement for each year.

Step 4: Our resource will collect all the required documents/information and will complete all below-mentioned Compliance activities for your Section 8 Company:

• Maintain Accounts and Prepare financial statements
• Income tax return
• Audit
• Annual Filing of Forms
• Annual returns
• Annual General Meeting

Step 5: Our resource will collect all the required documents/information and file your Section 8 Company income tax return with ROC (Registrar of Companies) along with the mandatory documents after getting a final confirmation from your finance team if required.

Step 6: Our resource will help your Section 8 Company in accounts audit.

Step 7: Our resource will draft minutes of meetings, notices and will also maintain the statutory register.

Step 8: The above- mentioned steps will complete your Section 8 Company Compliance under the Companies Act 2013.

Where it might get difficult to navigate the complexity of regulations, it is equally important to remain compliant with the rules and regulations to avoid any legal issues. Therefore, Section 8 company registration must adhere to the timeframe for quite a few compliances, which are mentioned below for your better understanding- 

Consequences of non-compliance with Section 8 company regulations

In case of non-compliance as per Section 8 Company Regulations, it can impose penalties, which include the following-

• The central government has the right to revoke an organization's authorization if it is not operating efficiently or is not fulfilling its purpose.
• It is viewed that an organization’s leaders or officials are subjected to imprisonment, with chargeable amount of fines up to 25 lakhs. 
• When an organization's activities are unjustly directed, officials are primarily at fault as per area 447.

If in case, they are found guilty, then the company will have to pay a fine of 10 lakhs, which can reach up to 1 crore depending on the scandal.

At Corpseed, our team is fuelled by an unwavering passion for Section 8 company compliance. With years of experience under our belts and an extensive knowledge base, we are the go-to experts for all your compliance needs.

But we don't stop at just offering consultation. We go above and beyond to ensure that your Section 8 Company Registration is handled with utmost care and precision. Our dedicated team will work tirelessly to ensure that your application is filed correctly and in a timely manner, leaving no room for errors or delays.