Compliance Calendar for Section 8 Companies – Companies Act | SEBI Laws

What are the Compliances for Section 8 Companies?

Section 8 companies, named after Section 8 of the Indian Companies Act, 2013, are established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. These companies are similar to non-profit organizations or NGOs and have specific compliance requirements:
– License from Central Government: Section 8 companies must obtain a license from the central government, which allows them to operate without the term "Limited" or "Private Limited" in their names.
– Annual Filings: Like all other companies, Section 8 companies must annually file their financial statements, annual returns, and other necessary documents with the Registrar of Companies (ROC).
– Board Meetings: At least one board meeting must be held in each half of a calendar year, and the gap between the two meetings should not be less than ninety days.
– CSR Compliance: If a Section 8 company meets the criteria set out for Corporate Social Responsibility (CSR) under the Companies Act (net worth of INR 500 crore or more, turnover of INR 1000 crore or more, or net profit of INR 5 crore or more), it must comply with CSR regulations. – Secretarial Audit: Required for every company that is required to maintain cost records or is a listed company, or companies with a paid-up share capital of INR 50 crore or more, or turnover of INR 250 crore or more. – Event-based Compliance: Certain events, such as changes in the governing board or modifications to the objectives of the company, require immediate reporting to the ROC. – Special Resolutions: Any alteration of the Memorandum of Association (MOA) or Articles of Association (AOA), especially regarding the objects of the company or conditions regarding profit distribution, must be approved through special resolutions. – Conversion or Amalgamation: Section 8 companies can only convert into any other kind of company or amalgamate with another company after satisfying specific conditions set by the central government.
– Maintenance of Books of Accounts: Proper books of account must be maintained, reflecting accurate and fair value of the financial affairs of the company.
– Statutory Audit: Regardless of their size, Section 8 companies must have their annual accounts audited by a Chartered Accountant.
– Income Tax: These companies must file income tax returns every year and can avail of exemptions provided under sections 11 to 13 of the Income Tax Act, 1961, if registered under Section 12A and 80G.

By Taxmann’s Research and Advisory Team | Corporate Laws

Table of Contents

1. Introduction
2. Compliances Applicable to the Non-Profit Companies (Section-8 Companies)

1. Introduction

With the introduction of the Companies Act, 2013, in 2014, the compliance burden of every Company has increased substantially irrespective of its nature, be it a Private Limited Company, Public Limited Company, Listed Company, Small Company, Section-8 Company, or One-Person Company (OPC).

In order to increase transparency in reporting, the MCA and SEBI frequently come out with new amendments by way of circulars and notifications. Companies must adhere to all the applicable compliances within the specified due dates. Any non-compliance on the part of companies often results in heavy penalties. It is a good practice to track the relevant compliances as per the applicable provisions of the Companies Act, 2013/SEBI as the case may be.

Under the Companies Act 2013, various compliances must be done on a time-to-time basis. For a better understanding of the same, we have categorised the various Compliances on the following basis:

• Event-based Compliance: Compliance is to be done upon the occurrence or happening of a certain event, like filing E-form INC-22 upon shifting the company’s registered office.
• Time-based Compliance: Compliances are to be done on an annual, half-yearly, and quarterly basis, like the Filing of E-form AOC-4 and MGT-7.
• Specific Criteria-Based Compliance: Some compliances are based on paid-up share capital, turnover, or any other specific requirement, such as filing E-Form AOC-4 (XBRL) or appointing a Company Secretary.

In addition to the above-mentioned compliances, a listed company is also required to make various Quarterly, half-yearly, and event-based compliances and disclosures under the following regulations:

• SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
• Compliances under SEBI (Depositories and Participants) Regulations, 2018
• Compliances under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
• Compliances under SEBI (Prohibition of Insider Trading) Regulations, 2015

This write-up also discusses in detail the compliances w.r.t. to holding of Annual General Meeting (AGM), Minimum no. of Board Meetings/Committee Meetings as required under the Law.

2. Compliances Applicable to the Non-Profit Companies (Section-8 Companies)

1. Directors of a section 8 company need to make subsequent disclosure only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees. MCA GSR 466(E) dated 05.06.2015.

Dive Deeper:
Compliance Calendar for Unlisted Public Companies
Compliance Calendar for Private Limited Companies
Compliance Calendar for One Person Company & Small Company
Compliance Calendar for Listed Companies
Compliances Based on Threshold Limits under the Companies Act, 2013