Section 8 Company Compliance
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Overview of Section 8 Company Compliance
Updated on December 31, 2022 04:39:28 PM
The Companies Act, 2013 mandates that all Section 8 Companies comply with the regulations set forth by the Ministry of Corporate Affairs (MCA).
The primary objective of establishing a Section 8 Company is to foster activities related to art, science, sports, commerce, charitable endeavors, and more. Section 8 Companies, often classified as Non-Governmental Organizations (NGOs), enjoy the status of a “Limited Company” without having to append the word “Limited” to their names. In essence, Section 8 companies dedicate their efforts towards supporting underserved communities and sectors in India. These entities are not obligated to distribute income or dividends to their members.
Benefits of Section 8 Company Compliance
| Gives company a better credibility | Protects the company from any legal trouble | Help the company in circumventing penalties | Work in the direction of forming trust amongst the customers |
Documents Required for Annual Compliances of Section 8 Company
| Memorandum of Association | Article of Association | DSC | Certificate of Incorporation |
Event-based Annual Compliances of Section 8 Company
Event-based compliances, as the name suggests, are regulatory requirements that must be fulfilled upon the occurrence of specific events. Unlike annual compliances, these obligations are non-periodic in nature.
Checklist for Event-Based Compliances for Section 8 Company:
Transfer of shares Appointment or resignation of Directors Appointment or resignation of Auditors Change in the company’s name Amendment to the company’s Memorandum of Association (MOA) Appointment of Key Managerial Personnel Receipt of share application money Any alteration in the company’s structure
Penalties to be charged in case of Non-Compliance
The Ministry of Corporate Affairs holds the authority to levy certain penalties in cases of non-compliance with prescribed procedures.
Penalties to be imposed include:
Revocation of the license granted to the company if it is found to be operating unlawfully or in violation of its objectives.
Fines ranging from a minimum of ten lakh rupees to a maximum of one crore rupees may be imposed on the company.
Directors and every officer of the company found to be in default may face imprisonment for a term that may extend up to twenty-five lakh rupees, or both.
If it is determined that the affairs of the company were conducted fraudulently, each officer in default will be liable for action under section 447.
Why Taxvilla
On average, it takes around 7-10 working days to register a private limited company in India subject to document verification by MCA.
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