In order to avoid penalties, Section 8 company compliance checklists are important. Second, it ensures the smooth operation of the company. In drafting the companies, we aim to increase transparency and reliability of Section 8 companies.
Section 8 Compliance for Companies
Section 8 companies must comply with the annual compliance duties as outlined in the Companies Act, 2013 and Income Tax Act, 1961. In this way, the company is guaranteed to be loyal and valid, while avoiding penalties for non-compliance. Throughout the year, compliance tasks must be completed.
Vakilsearch has drafted this annual compliance checklist for Section 8 companies. Before submitting the documents, make sure everything is correct. As a result, you can concentrate on the day-to-day operation of the business.
Tasks and requirements for annual compliance
Dedicated CA/CS team
Section 8 companies should have a dedicated chartered accountant (CA). In order to set up your Section 8 company, you must have your own CA on staff. In order to organize your business observation, they will be appointed based on your declaration. It is possible to inquire about the company’s compliance, taxation, and regulatory issues.
Accounting Support
In accordance with the law, you must have an accounting scheme. In order to complete the balance sheet, profit and loss transactions of your company, the accounts team will examine the reports of the company at the end of the financial year.
Assistance with annual audits
Every Section 8 company should provide internal audit documentation annually. Having a dedicated expert on staff will facilitate the corporation’s statutory audit.
Return filing for income tax
In addition to advising the owners to file income tax recoveries, tax experts will supervise it from time to time regarding tax planning and filing, advance tax compensations, etc.
Providing company secretary services
According to the Companies Act of 2013, a company secretary (CS) instructs and reviews the minutes of your company meetings. A minimum of four board conferences should be conducted in one financial year, except for small startups, while small companies should hold two board meetings at most.
Filing of financial statements and annual returns
When the shareholders approve your financial statements at the Annual General Meeting (AGM), a division of experts must document your financial transactions and annual returns with the Ministry of Corporate Affairs (MCA) via forms AOC-4 and MGT-7.
Other Compliances
A Section 8 company may retain a third party to assist with compliance assignments in addition to the annual compliances indicated above. At an additional cost, you may provide documentation regarding the recommendation. Tasks such as these include:
Within 30 days from appointment of the director, the director must sign a consent form (Form DIR 2) authorizing seizure of the office. In the event of an appointment of a management controller, manager, or another key administrative position, the employee must repay the form (Form MR-1) within 60 days.
Non-compliance penalties
All of these rules and regulations must be followed, as previously mentioned. Non-compliance will result in a fine for the company.
- In the event that anyone does not follow a declaration issued by the district commission or the state commission, or the national commission, as the prosecution may be, they are subject to imprisonment for a period that shall not exceed one month, but may be extended to three years, or to a penalty of not less than 25,000, but not less than one million dollars, or both
- For the prosecution of offenses under Sub-section (1), the district commission, state commission, or national commission, if conferred with such leverages, shall have the authority of a judicial magistrate of the first-class, notwithstanding anything contained in the Code Of Criminal Procedure, 1973 (2 of 1974). According to the Code of Criminal Procedure, 1973, a district commission, a state commission, or a national commission shall be considered a first-class judicial magistrate.
- Unless otherwise provided, the district commission, state commission, or national commission shall strive to prosecute the offenses under Sub-section (1)
- Non-compliance can lead to penalties ranging from 25,000/- to 5,000/- as well as imprisonment. For some time, the company and its directors can also be blacklisted.
Benefits of Annual Compliance
Compliance with the relevant regulatory regulations of the business can result in the following benefits:
Reputation
As a result of accepting the needs of the ROC and the MCA, public limited companies and members of the company will gain public recognition. An organization can improve compliance with regulations through this operation. Investing in a public limited company that complies with the law would attract more investors.
Compliance
Compliance ordinances would not apply to public limited companies if all compliances were completed within a certain period. A public limited company can achieve its goals by considering this.
Fewer Burdens
Public limited companies can handle minor disadvantages when it comes to complying with regulations by accepting the provisions of the administration. Non-compliances can impede a company’s improvement if they’re not monitored or documented. Therefore, all provisions concerning subordination must be followed by the partners.
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