Post Incorporation Compliance for Section 8 Company

Section 8 company is a legal entity specially designed keeping in view the objective of charitable trust for social welfare without any intention to grab any kind of profit or dividend.  Not every company is formed with primary motive of earning maximum profit, there are few organizations specially established to fulfill charitable and Non profit organizations.

In India following three forms of Non profit Organizations are widely practiced-

1. Trusts
2. Societies and
3. Sec 8 Companies

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Regulatory Authorities for section 8 companies

Companies Act, 2013 and Companies (Incorporation) Amendment Rules, 2019 regulates all rules and regulations for incorporation of sec 8 companies in India.

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Some attractive features of Section 8 Company

1. Charitable Object: Sec 8 companies are purely formed with an objective of charity for social welfare of the society.
2. Limited Liability : The liability of members is limited. Members of sec 8 company cannot have unlimited liability.
3. Government License: Sec 8 company can commence business only after obtaining Government license
4. Benefits and Privileges: owing to the objective of sec 8 company, the government has accorded some benefits and exemptions as compared to other forms of companies.

In simple words, section 8 Company is a legal entity for non-government or non-profit organizations. Once the company gets registered successfully on Ministry of Corporate (MCA) site, there are some post incorporation compliance for Sec 8 Company to be complied. Non compliance of same shall attract penal provisions and even suspension of license in certain cases. Thus Section 8 company post registration shall comply with compliances.

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Post incorporation compliance check list for Sec 8 Company

No doubt Sec 8 company enjoys lot of benefits and exemptions from government still there are some common post incorporation compliances that needs to be mandatorily followed by sec 8 company too. Here are some major post incorporation compliance check list for Sec 8 Company as non-compliance of which may attract various penal provisions as per Companies Act, 2013.

Form No	Compliance	Due Date
MGT-15	Annual General Meeting	30th September
AOC-4	Directors Report	Within 30 days of the Annual General Meeting
MGT-7	Annual Returns	Within 60 days of the Annual General Meeting
Form ITR -6	Income Tax Returns	30th September

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1# Opening of Bank Account

After formation of Sec 8 comapny, the first and foremost step is opening of Bank Account in the name of the Company. Opening of bank account may require following documents-

• Copy of Articles of Association of the Company
• Copy of Memorandum of Association of the Company
• Challan copy of Spice form
• Copy of Pan Acknowledgement
• Copy of Board Resolution
• Certificate of Incorporation
• Any other document as demanded by bank official

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2# First Board Meeting

Section 173(1), of The Companies Act 2013 deals with conduct of Board meeting of the companies. As per the provisions of the section, Sec 8 company shall within 30 days from the date of its incorporation conduct first board meeting of the company. Directors can attend the meeting either in person or through video conferencing.

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3# Deposit of Share capital money

Once bank account is opened, the next compliance by sec 8 company is of depositing the share capital money in the bank account within 180 days from the date of incorporation of the company.

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4# Issue of Share Certificates and payment of stamp duty

Sec 8 company is under obligation to issue share certificates to the shareholders of the company within 60 days from the date of incorporation of the company and pay stamp duty within 30 days from the date of allotment of shares as per the relevant stamp act applicable on the state.

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5# Registered address

As per Section 12(1) of the Companies Act, 2013 a sec 8 company should have its registered office within 15 days from the date of incorporation of the company. This address should be used for all types of future communications from various authorities.

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6# Appointment of Auditors within 30 days

As per Section 139 of the Companies Act, 2013 every company is required to appoint its first auditor within 30 days of incorporation by its board of directors and in case the board of directors fails to appoint the auditor within said period of 30 days then they shall call an extraordinary general meeting of shareholders for appointing an auditor. The appointment of auditor through shareholder must be completed within 90 days.

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7# Affixing Sign Board

On registration of sec 8 company, every sec 8 company having its office all over India should affix its name at every place from where it is carrying on business.

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8# Printing of letter heads

Section 12 mandate sec 8 company to print the following information on all its Business Letterhead / Billheads/Letter Papers etc.

• Name of the Company    
• Address of Registered Office
• CIN Number
• Telephone No.
• Fax (if any)
• E-mail Id
• Website address if any

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9# Disclosure of interest

At First board meeting, every director is under obligation to disclose his interest in any company/firm/body corporate/association of individuals as outlined in section 184(1) of the Companies Act 2013. Any changes in the disclosures shall be intimated by the director to board of directors in its first meeting held during each financial year. An independent director, if any, must give a declaration that he meets the criteria of independence during the first board meeting as a director.

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10# Maintenances of Statutory Registers 

It is mandatory as a post incorporation compliance for Sec 8 Company  to maintain following statutory registers at the registered office of the company–

• MGT-1: Register of Members
• MGT-2: Register of Debenture holders Register and Index of Beneficial Owner
• MGT-3: Foreign Register of Members, Debenture holders, other security holders or beneficial owners residing outside India
• Form SH-2: Register of Renewed and Duplicate Share Certificate
• Form SH-3: Register of Sweat Equity Shares
• Form SH-6: Register of Employee Stock Options
• Form SH-10: Register of Shares or Securities Bought Back Register of Directors and KMPs Register of Deposits
• Form CHG-7 Register of Charges
• Form MBP-2: Register of Loans/Guarantee/Security and Acquisition by Company
• Form MBP-3: Register of Investments not held in its own name
• Form MBP-4: Register of Contracts or Arrangements in which Directors are interested

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11# Declaration of Commencement of Business

As a post incorporation requirements of a company, every sec 8 company is required to file a declaration of commencement of business within 180 days from the date of incorporation of the company in accordance with the Companies (Amendment) Ordinance 2018, Section 10A, in form INC-20A.

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12# Books of Accounts

As per section 128, every sec 8 company shall maintain proper books of accounts which shall represent true and fair view of the financial disclosure of the company.

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13# Apply Shop Act Registration

As a post Incorporation Compliance for sec 8 Company, the next important step is obtaining shop act license immediately. The basic documents for obtaining shop act license is MOA, AOA, COI, Directors KYC documents etc.

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14# Professional Tax Registration of Company and

It is mandatory to obtain Professional Tax registration to sec 8 company and all directors, all designated partners and all employers. However, all Union Territories including NCT of Delhi and certain states like Haryana, Punjab, Rajasthan, Uttar Pradesh etc. does not have any law to tax profession.

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15.Trade Mark registration

Sec 8 Companies should make immediate provisions for safeguarding interest of trademark, copyrights, patents rights by making an application of trademark at Trade Mark site Application of trademark is not mandatory for Sec 8 Company but it is strongly recommended to apply for registered trademark owing to its huge legal infringement of rights benefits.

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Conclusion:

Company is under obligation to comply with basic legal framework. Post Incorporation Compliance for Sec 8 Company is most essential and basic need from compliance view in order to avoid monetary as well as non-monetary penalties.

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