Annual Compliances for Section 8 Company

Clearly, running a business in the form of a Company is not something to be undertaken lightly.

Compliance is not only 'doing the right thing', or 'ticking a box' but it is the way of working and part of the business.

Remember, the cost of non-compliance is always more than the cost of compliance.

What is Section-8 Company?

A Section 8 company is a non-profit organization formed with the objective of promoting commerce, arts, science, sports, education, research, social welfare, and protection of the environment.

Who can Incorporate a Section 8 Company?

An individual or group of individuals can apply for Section 8 Company Registration if it holds the below-mentioned intentions.

• If the company intends to promote science, commerce, education, art, sports, research, charity, social welfare, protection of the environment, or other objectives
• If the company has the intention to invest all the profits or the income generated after incorporation in the promotion of such objects only;
• When the company is not intending to pay any dividends to its members.

Compliances for Section 8 Company:

1. Appointment of An Auditor

It is mandatory for companies to appoint an auditor. The book of accounts and annual returns of the company shall be audited by the statutory auditor who will be appointed for a period of 5 years.

2. Board Meetings

Section 8 companies are required to have at-least one meeting within every six calendar months.

(Only 2 Meeting within Financials year)

3. DIR 3 KYC

Applicability:

• Every individual who has been allotted a Director Identification Number (DIN) as on 31st march of a financial year.
• All the Directors of the Company shall file this form on or before 30th September every year.

4. Annual General Meeting

Every Company is required to hold an Annual General Meeting on or before 30th September every year during business hours (9 am to 6pm), on a day that is not a public holiday and either at the registered office of the Company or within the city, town or village where the registered office is situated.

5. Notice of AGM

Section 8 Company can hold a meeting with minimum 14 days' notice as against 21 days' notice otherwise applicable under section 101 (1) of Companies Act.

6. AOC-4

Company is required to file its Balance Sheet along with the Statement of Profit and Loss Account, Cash flow statement, Directors' Report and Auditors' Report in this form within 30 days of holding of the Annual General Meeting.

7. MGT-7

Every Company will file its Annual Return within 60 days of holding of the Annual General Meeting.

8. DPT-3

• Return of deposits
• OR Particulars of transactions by a company not considered as deposit as per rule 2 (1) (c) of the Companies (Acceptance of Deposit) Rules, 2014
• OR Return of Deposit and Particulars of transactions by a company not considered as deposit.

9. MBP-1

Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial or changes in his interest.

10. DIR-8

Declaration in form DIR-8 that director is not disqualified is required to be given in every financial year

11. Company Name Board

Every Company shall paint or affix the name and address of the registered office and keep the same painted/affixed, outside every office or place in which its business is carried on, in legible letters.

12. Letter Head of Company

Every Company shall get its name, address of registered office, CIN, telephone, and email printed on all business letters, billheads, letter papers.

FAQ

Q1. Can Partnership become a member of Section 8 Company

Yes

(i) Any person or an association of persons intending to register a limited liability company for objects specified below can opt to apply for registration of Section 8 Company.

• The term 'person' is not defined under the Companies Act,2013

(ii) Section 2(41) of the General Clauses Act, 1897 provides that

• 'person' shall include any Company, or association or body of individuals, whether incorporated or not. Therefore, such a person can be a natural or legal person.
• It is also relevant to note that by virtue of provisions of section 8(3), even a partnership firm can be a member of Section 8 Company.
• One person company cannot become a member of Section 8 Company

Q.2 Can Company with unlimited liabilities cannot be registered as Section 8 Company?

The company with unlimited liabilities cannot be registered as a Section 8 Company. Section 8 Company may be incorporated as a company limited by shares or by Guarantee

Q.3 Can Section 8 Company be amalgamated with a company which is not a Section 8 company.

No. Section 8 Company cannot be amalgamated with a company which is not a Section 8 company.

Q.4 How many meetings are required in Section 8 Company?

Section 8 companies are required to have at least one meeting within every six calendar month.

Q. 5 What is requirement of Quorum in case of Section 8 Company?

A quorum for board meetings of section 8 companies is directors or 25% of its total strength, whichever is lower. However, the quorum shall not be less than two members.

Q. 6 What are exemptions for Section 8 Company?

• Definition of Company Secretary in section 2(24) of the Companies Act, 2013 is not applicable to Section 8 Companies.
• Section 149(1), Section 178 of Companies Act 2013 shall not apply to Section 8 Company.
• Secretarial Standards are not applicable on a Section 8Company
• Section 118 does not apply as a whole except that minutes may be recorded within 30 days of the conclusion of the meeting in case of companies where the articles of association provide for confirmation of minutes by circulation.
• Directorship in Section 8 Companies will not be counted for calculating the ceiling with respect to a maximum number of directorships as prescribed under Section 165 of the Companies Act 2013.
• Section 8 Company can hold a meeting with a minimum 14 day's notice as against 21 day's notice otherwise applicable under section 101 (1) of the Companies Act.
• A section 8 company need not comply with requirements of section 160 with respect to notice of candidature for appointment of a director other than a retiring director if the Articles of association of such company provide for the election of directors by ballot
• A section 8 company need not comply with the requirements of section 178 with respect to constituting the Nomination and Remuneration Committee and Stakeholders relationship committee.
• A section 8 company may decide the following matters specified under section 179(3) by passing a resolution by circulation; 1. To borrow monies; 2. To invest the funds of the company; 3. To grant loans or give guarantee or provide security in respect of loans;

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. In No Event Shall I Shall Be Liable For Any Result Arising Out Of Or In Connection With the Use of the Information.