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Annual Compliance of Section 8 Company
Promoting commerce, arts, science, sports, and education for the benefit of society
About Annual Compliance of Section 8 Company
A Section 8 Company is formed with the objective of promoting commerce, arts, science, sports, education, research, protection of environment etc. for the benefit of the society and country as a whole.
Though Section 8 companies are authorized to run a business of profit, the profit can only be utilized for the social objectives for which it was formed.
Compliance Authorities
A Section 8 Company is strictly required to adhere to the compliance set by the Registrar of Companies (ROC) and Income Tax Authorities.
Failure of Compliance
Failing to meet these compliances attracts heavy penalties and may result in the director’s disqualification in the long run.
Company Compliance with TRUSTLINK
Section 8 Company compliances are time bound. Each compliance has a definite deadline, beyond which penalties may apply to promoters. TRUSTLINK ensures your company runs smoothly without legal hurdles.
- Keeping clients updated on upcoming compliances
- Sending early reminders for document preparation
- Helping promoters prepare well in advance
- Avoiding last-time issues and hefty penalties
Compliances for Newly Incorporated Company
A newly incorporated Section 8 company has some specific one-time compulsory filings that must be adhered to soon after incorporation.
Appointment of First Auditor
Must be appointed within 30 days of incorporation for statutory audit purposes. It is filed with the ROC via Form ADT-1. The auditor holds office till the first AGM.
Commencement of Business
Mandatory for companies incorporated after 2nd November 2018 with share capital. Form INC-20A must be filed within 180 days as a declaration that subscribers have paid for shares.
Annual Compliance for a Section 8 Company
The following compliances are mandatory every year to keep your company fully compliant and operational.
Click on the folders to read the notes
Board Meetings
The first Board Meeting must be held within 30 days of incorporation. Subsequently, a minimum of 4 board meetings must be held every year with a gap of not more than 120 days between consecutive meetings.
Directors must also provide their Acknowledgement of Interest (MBP-1) at the first meeting of the board in every financial year.
Annual General Meeting
The Annual General Meeting (AGM) must be held on or before the 30th of September every year. A proper notice is required to be sent to all members before conducting the AGM.
The subsequent Auditor is also appointed during the first AGM and holds validity till the 6th AGM.
Annual Return (MGT-7)
Companies must file their Annual Return using Form MGT-7 covering the period from 1st April to 31st March. This must be filed within 60 days of conducting the AGM.
The general due date for filing this return is typically the 29th of November.
Financial Statements (AOC-4)
The company must file its Financial Statements along with the Directors' Report using Form AOC-4. This filing must be completed within 30 days of conducting the AGM.
Statutory Audit
All accounts of a Section 8 company must be properly audited by an independent Chartered Accountant. The audited financial statements are then filed with the Registrar.
Income Tax Return
If the Section 8 company is registered under Sections 12A and 80G, it is eligible for tax exemptions. If it is not registered, it is taxed similarly to a normal profit-making company.
Benefits of Annual Compliance
Maintaining a clean compliance record not only keeps you legally safe but brings massive growth opportunities for NGOs and Section 8 entities.
Increases Credibility
Regular compliance enhances the credibility of the company. A clean compliance status is openly visible on the MCA portal, building trust among stakeholders.
Helps in Funding & Grants
Properly documented companies have a higher chance of successfully getting government grants, public donations, and CSR funding.
Attracts Corporates & Donors
Large corporates and donors prefer to associate with non-profits that have strict regulatory discipline and transparent financial reports.
Avoids Penalties & Maintains Reputation
Timely compliance avoids heavy government penalties, keeps directors safe from disqualification, and maintains the organization's social performance and reputation.
Documents Required for Annual Compliance
Ensure you have the following basic documents prepared to successfully file your annual returns and compliances.
Company Details
- PAN Card of the Company
- Certificate of Incorporation
- MOA (Memorandum of Association)
- AOA (Articles of Association)
Financials & Signatures
- Audited Financial Statements
- Audit Report
- Board Report
- Digital Signature Certificate (DSC) of Directors
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