Non-profit organizations (NPO) or section 8 companies are organisations with the association of people operating for societal improvement. A non-profit organization can be a trust, a society, or a Section 8 corporation in India. The money generated by this organization does not belong to its members or partners. It is, however, used only for the benefit of society.
* At least two people are needed to form a Section 8 company, and there is no maximum number of members
* The minimum number of members in a society company is seven
* Registrar of Corporates (ROC) can also enrol a non-profit company under Section 8 of the Companies Act.
Complying with Section 8 of the Act
Companies Act, 2013 specifies the requirements for registering a section 8 company. It is mandatory to record all income received by a Section 8 company for the basic documentation with the Ministry of Corporate Affairs (MCA). In the provided timeframe, each organization should document their annual income and examine their budget statements with MCA.
Any company with an annual income up to a crore must file a Registrar of Companies (ROC) report. Regardless of whether a single transfer is made, it should be recorded and submitted to comply with Section 8. Every corporation should be aware of it. An easy financial year can be achieved by documenting both applications.
Depending on the date of the Annual General Meeting (AGM), a company must file its annual report. ROC may remove the company’s name from its register, as well as disqualify its administrators for consecutive defaults. Further, it has been noted that MCA is actively taking the necessary measures to deal with any losses of this nature.
In light of the above, it is necessary for the Section 8 company to comply with the requirements described in the Companies Act. In order to comply with the MCA, the Section 8 company must meet certain requirements.
Compliance with Section 8 Companies on an annual basis
Section 8 companies are expected to perform the following compliance tasks. The compliance calendar includes all of these items
* A company that operates under Section 139 of the Companies Act, 2013 must hire an auditor
* Under Section 8 of the Companies Act, 2013, the company should keep a statutory account containing finances collected, payments developed, partners, etc.
* Gathering meetings: Company-related conferences and annual broad meetings should be held, and details should be recorded.
* Detailed fiscal information and corporate social responsibilities are included in the annual report filed by the directors of the company.
* For the earlier financial year, the company will document the balance sheet, revenue and loss a/c, cash flow transactions, and other financial allegations.
* Tax returns are due by 30 September at the end of the appraisal year.
* Within 30 days of the last meeting of the broad body, the financial statement must be provided in the application form (E-FORM AOC-4).
* For retrievals within 60 days of the annual general meeting, companies should file form MGT-7 with the ROC.
Compliance with Section 8 has many benefits
Section 8 registration and annual compliance provide multiple benefits to companies. Below are a few of them:
* Donations from venture capitalists are very easy to obtain. Improved yearly compliance is the price of community assurance
* A business holder must accept all requirements of Section 8 of the Companies Act, income tax, GST, and state laws
* Companies must also file their income tax returns by 30 September each year, in addition to the ROC compliance.
* The compliance regulations for Section 8 companies have been improved since 2018
* Section 8 companies have several advantages, such as limited liability protection, easy to set up the assistance from financial speculators, and ceaseless existence while keeping up with the annual compliance.
* Company laws, income tax laws, GST laws, and state laws must be followed by entrepreneurs
* Companies must comply with ROC compliances as well as annual filing requirements by 30 September each year
* The compliance requirements for Section 8 companies have been improved since 2018.