Introduction:
Most of us are accustomed to organizations like private limited corporations, LLPs, and public limited companies. These are legitimate businesses that produce a variety of commodities and provide services. In contrast, firms under Section 8 are established in a range of industries for the good of society.
Even though their names do not include the word "limited," they are limited companies that were established by the Companies Act and are continuing to be regarded as such.
Overview of Section 8 Company and its compliance:
A business's capacity to be regarded by the central government as an institution rather than a branch office. The Central Government has the power to issue an order saying that, in the event of any company, (1) any facility that performs similar duties as that performed by the company's head office, or (2) any institution engaged in any manufacturing, processing, or manufacture, will not count as a branch office of the organization for all or any reasons of this Act.
Creating Section 8 Company was done to support and advance endeavors in the arts, sciences, sports, business, humanitarian work, etc. They are allowed to be considered as "Limited Companies," despite the fact that the word "Limited" is not put at the end of the names of these businesses. Simply said, Section 8 companies serve underdeveloped communities and sectors in India. These companies have no obligation to distribute any profits or dividends to their shareholders.
Benefits of Section 8 Company Compliance:
Section 8 company compliance increases the reputation of the company in the market.
It defends the business against any legal issues arising in the future related to any matter.
It also assists the business in avoiding penalties due to default.
It can also help in winning customers' trust by being trustworthy.
Required Documents for a Section 8 Company Compliance:
Income tax PAN is a prerequisite that Indian people must fulfill;
Identification documentation, such as a voter ID, Aadhar card, driver's license, or passport, is required; however, for overseas nationals, a passport is compulsory;
A bank statement, an electricity bill, a phone bill, a mobile phone bill, or any one of the others can be used to determine where you live;
The lease agreement, which contains the most recent rent receipt, a copy of the most recent utility invoice in the landlord's name, and, in the case of rented property, a letter from the owner of the property saying that they have no problems, all of which serve as proof of the registered office address;
If the property is owned by both the Director or the Promoters, any of the ownership-establishing paperwork, such as a sale deed, house tax receipt, etc., together with the certificate of no objection.
Memorandum of Association - This legally binding document outlines the organization's basic ideals. It serves as a manual for all laws and regulations that pertain to how a corporation engages with the outside world.
Based on if it is advised that the Business be incorporated as a private or public company, the MoA for the Business must have at least two or three subscribers.
Article of Association - The articles of incorporation often provide details on how a business would distribute funds, issue dividends, examine financial documents, and grant voting rights. This list of rules can be thought of as the user manual for the company because it outlines the procedure for performing the everyday tasks that must be completed.
Director Identification Number (DIN): Sections 153 and 154 of the Companies Act of 2013 require anyone who is appointed as a director of a company to apply for a DIN. A DIN and a DSC, or Digital Signature Certificate, are requirements for all directors.
Documents Required for Annual Compliance of Section 8 Company:
1. Choosing an auditor
A Section 8 firm must appoint an auditor to oversee its financial records every year.
2. Keeping Registers
The expectation for Section 8 companies is that they will keep statutory records in registers. These registers are kept on an annual basis to evaluate the company's performance every year and they contain details about members, loans, fees, and investments.
3. Keeping Financial Statements Up to Date
These records are maintained on an annual basis and are provided to Registrar. The document posses information regarding:
First Trading Account
The Profit and Loss Statement
Balance Sheet
4. Director's Report preparation
This report must be submitted by using form AOC-4 as per Section 134 of the Companies Act. The purpose is to provide a shareholders with an idea of the company's financial situation and commercial operations.
5. Organize a board meeting
It shall take place twice in a year. There shouldn't be more than 90 days before the two meetings.
6. Organize the annual general meeting
Every year, on or before September 30th, the Section 8 Company's annual general meeting must be convened. It must be attended by all of the directors, members, and auditors. MGT-15 is used to submit the report of the general meeting and it must be submitted within 30 days.
Within 60 days of the Annual General Meeting's closing, the annual return is submitted. If there isn't an annual general meeting in that particular year then the annual return must be submitted within sixty days of the day in which annual general meeting took place, which is September 30. It should be related to the notice that details the justifications for canceling the annual general meeting.
Annual Compliance for Section 8 Company:
The annual compliance responsibilities for Section 8 company registration are as follows. The regulation package includes each of them.
To choose an auditor.
Maintaining a Register of the Company
It is required to have annual general meetings and other statutory gatherings.
Annual Reports should be given by Director
The company's previous fiscal year's balance sheet, profit and loss statement, cash flow statement, and other financial documents must be submitted.
Tax Compliance for Section 8 Companies:
Tax Returns: Tax returns must be submitted on or before September 30th of each assessment year.
Financial Statements Submission: Within 30 days of the most recent general body meeting, the financial statement must be submitted using the proper form (E-FORM AOC-4).
Returns Filing: During 60 days of the annual general meeting, companies must file Form MGT-7 with the Registrar of Companies (RoC).
Due Dates for Filling Section 8 Company Compliances
Income Tax Return Filing: Section 8 businesses must submit their returns for income taxes by September 30th of each year to summarise their entire revenue. However, the corporation can benefit from exemption from taxes if it is registered under Sections 12A and 80G.
Conclusion:
In summary, Section 8 businesses are non-profit or non-governmental entities that use their earnings to further a variety of social goals. By following their annual compliance standards, these businesses can gain much and stay out of potential trouble by doing so. It is advised that you incorporate your firm as a Section 8 company rather than a trust or society for this reason.
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