Section 8 annual compliance procedures can be time-consuming and stressful. Contact Swarit Advisors, and we’ll handle all of your compliance responsibilities.
- Annual Return Filing
- Filing of Financial Statement
- Filing ITR
- End-to-end support
An Overview of Annual Section 8 Compliances
A Section 8 Company Goals A Section 8 Company’s Goals are to Support Arts, Commerce, Sports, Charities, and Other Fields These businesses are registered to promote India’s underrepresented communities and industries. One of the most popular types of non-governmental organizations in India is a Section 8 company. Since it is registered under the Companies Act of 2013, it must adhere to the Act’s compliance requirements. The Section 8 Company must strictly adhere to government regulations. A company must pay the penalties to the government if it fails to keep up with Section 8 Annual Compliances. All Section 8 companies in India are required by the Companies Act of 2013 to strictly comply with the MCA (Ministry of Corporate Affairs).
Benefits of Complying with Section 8 Annually
The following are the advantages of complying with Section 8 Annually:
Operational Transparency in the Company:
Compliance, such as filing annual returns, financial returns, and so forth. elucidate the financial situation of the company in detail. As a result, the transparency of the company’s operation or actual condition is made possible by filing compliances.
Companies that file compliance reports on time are more trustworthy than those that don’t. Consequently, it is simple for such businesses to obtain financial assistance and credit from the relevant authority.
Avoid Legal Problems:
You will become entangled in legal issues if you do not adhere to the Company’s compliance policies, such as receiving notices from the MCA, which could further put you in legal trouble. As a result, meeting the requirements on time is always recommended to avoid future legal issues.
Customers, suppliers, vendors, and regulatory bodies all have faith in businesses that file compliance reports on time and are transparent about their finances. These businesses are more trustworthy; and as a result, find it simple to establish trust with everyone.
Lastly, avoiding penalties is the primary motivation for timely compliance filings. Failure to comply could result in a number of negative outcomes, including the liquidation of a business, the loss of a license, or substantial fines.
ADT-1, also known as the checklist for Section 8 annual compliance filings in India Mandatory Appointment of Auditor The Section 8 Company must appoint an auditor to oversee the annual financial filings of the company. In accordance with Section 139 of the Companies Act of 2013, every business is required to submit an ADT-1 to the MCA detailing the appointment of the auditor. The statutory auditor, who will be appointed for a term of five years, will audit the company’s book of accounts and annual returns.
Books of Accounts: Every Section 8 company is required to keep its books of accounts up to date. The records of the annual return filing, among other things, are kept in the books of accounts.
Keeping Statutory Registers All Section 8 companies are required to keep the statutory records in the registers. The information about members, loans and investments, fees, and other things can be found in the register. In addition, it provides an overview of the Company’s annual activity.
Convening Meetings An annual general body meeting and other board meetings must be held within six months of the end of the financial year.
The information about the company and its compliance, as well as a list of financial, accounting, and social responsibility obligations, are all contained in the director’s report. This report is the responsibility of the Board of Directors. Every Section 8 company in India is required to produce a director’s report in accordance with the Companies Act, 2013.
Preparation of Financial Statements The balance sheet, cash flow statement, and profit and loss statement of the company are all included in the financial statement. As a result, every business is required to prepare the financial statements for the previous fiscal year.
Filing of Income Tax Returns Every Section 8 company is required to file income tax returns by September 30 of the following fiscal year. Returns on income are required because they provide an overview of the Company’s total income.
Financial Statements (AOC-4):
Every Section 8 company must submit a copy of its financial statements using the e-form AOC-4, which is the required format. Within thirty days of the date of the last annual general meeting, the financial statement must be submitted.
MGT-7, Annual Returns to the ROC For the purpose of filing the company’s annual returns, Section 8 companies must also submit Form MGT-7 to the ROC because they are registered as limited companies. Within sixty days of the date of the most recent annual general meeting, MGT-7 must be submitted.
Event-based Section 8 Annual Compliances As the name suggests, event-based compliances are those that must be filed when particular events occur. These are not periodic, unlike annual compliances.
The following is the Section 8 Company event-based compliance checklist:
Directors’ appointment or resignation;
Auditors’ appointment or resignation;
KPM (Key Managerial Personnel) appointments;
Money received from the share application;
A name change for the company;
Alterations to the Memorandum of Association (MOA) of the company;
Change in the registered address of the company;
Any other modifications to the organization’s structure, etc.
Penalties for Non-Compliance
In the event that it observes any non-compliance with the procedures, the Ministry of Corporate Affairs has the authority to impose specific penalties. The following are the charges that will be made:
- If the Central Government determines that the Organization is acting improperly or in violation of its mission, it may refuse to grant the Organization a permit.
- Any Organization official in default will be subject to imprisonment for a period of time and a fine that may be increased to Rs. either 25 lakhs or both;
- Every official in default will be subject to action under section 447 if it is discovered that the Organization’s issues were directed incorrectly;
- The organization will be punished with a fine of at least Rs. 10 lakhs and can be increased.1 crore.