Section 8 Compliance refers to the adherence to the legal requirements specified under Section 8 of the Companies Act, 2013 for non-profit organizations or companies formed for charitable, social, or educational purposes. A Section 8 company is granted a license to operate as a non-profit entity and must comply with specific regulations regarding its operations and financial activities.
Key compliance requirements for Section 8 companies include ensuring that all profits generated are used exclusively for furthering the organization’s charitable objectives and not distributed among members. The company must maintain proper accounting records, file annual returns with the Registrar of Companies (RoC), and conduct statutory audits. Additionally, Section 8 companies must adhere to specific governance standards, such as holding board meetings, submitting financial statements, and providing transparency in their operations.
Section 8 compliance ensures that the organization functions in line with its non-profit purpose, remains tax-exempt, and maintains its credibility and trustworthiness with regulators and donors.