Annual Compliances of Section 8 of Companies Act, 2013

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Annual Compliances of Section 8 of Companies Act, 2013

The section 8 companies are different from the other companies and hence it takes benefits of different exemptions provided by the government. However, there are some compliances that must be fulfilled by the company. 

The section 8 company must cater the annual compliances by filing the regular documents to the Ministry of Corporate Affairs (MCA). In case of non-compliances, the company will face the penalties by the Central Government. Below is a list of annual compliances that must be fulfill by the company:

Appointment of Auditor

Appointing an auditor is compulsory for the company as per the section 139 of the companies act. The auditor can be an individual or a firm who must be appointed within 30 days from the date of company section 8 registration. Similarly, a notice regarding the appointment of the auditor must be sent to the Registrar of Companies (ROC) within 15 days from the date of appointment of the auditor.

The auditor must be present in the first Annual General Meeting (AGM) of the company. And it will work on filing the annual returns and financial statements of the company. The auditor holds office from the first AGM to the sixth AGM which is a period of five years.

Arranging Meeting Periodically

The Annual General Board meeting and other statutory meetings should be conducted annually. The members, directors, shareholders and auditors must be notified regarding this and a notice should be displayed on the official website of the company. Hence, the report about the meeting must be sent to the Registrar of Companies (ROC) within 30 days from the date of the meeting by using the form MGT-15.

Filing Financial Statements

In the financial statements these are included, profit and loss accounts, balance sheet, cash flow statement and other details. Similarly, the credit flow and debit statements must be recorded and filed through the Form AOC-4. The financial statements must be filed to the ROC within 30 days of commencing the Annual General Meeting.

Filing Income Tax Returns

The section 8 company must file the ITR on or before 30th September for the financial year. The tax return can be filed online and it provides information about the company’s income, expenses, and profits gained. However, the government is provided several exemptions to sec 8 companies. Exemption under the Section 12A and 80G of the Income Tax Act, 1961. The profits are completely exempted from paying the income tax.

Filing of Annual Return Statements

The annual return statements must be filed through the form MGT-7. This must be submitted within the 60 days from the Annual General Meeting. In case, the AGM was skipped because of any reason, the financial statement must be filed from the date when the Annual General Meeting was to be held by mentioning the reason for not conducting the AGM.

Meeting Conducted by Board of Directors

In a financial year, the Directors must conduct board meetings twice. And the gap between the meetings should not exceed the period of 90 days. As per the rules of the Companies Act, 2013, the board meetings have a strength of 8 directors or 25% of the total strength of the company, choose whichever is lower.

Benefits of Following Section 8 Annual Compliances

You get the following benefits if you fulfill all the compliances of section 8 company:

• Transparency in Operations: The different compliances such as preparation and filing of financial returns shows the financial situation of the sec 8 company clearly. So, filing the compliances creates transparency between the operation or actual condition.
• Avoid Legal Complications and Penalties: As stated above, in case of non-compliance the company will face the penalties and can receive notice from the MCA which can put you into legal issues. So, it is advisable to adhere to all the compliances. 
• Better Credibility and Trust: Filing compliances on time will create credibility of the company and help it availing financial help and take market credit from the concerned authorities. Also, the customers and vendors trust the companies that are transparent about their financial details.

Conclusion

To conclude, the section 8 registration process and following the compliances after registration can be challenging. So, it is advisable to take assistance from the professionals. At Registrationwala, we assist the clients to handle the registration process and compliances properly and submission of details to the MCA (Ministry of Corporate Affairs). Also, if you want to register an NGO and want to know about different points, reach out to us.

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