Top 10 BPOs in Kolkata
11 Aug, 2023
There are two kinds of companies that run in India. One is a profitable company and the other one is a non-profitable company.The section 8 company incorporations are created as per Section 8 Companies Act, 2013.
The Section 8 Companies Act has a special objective. The promotion of Arts, Commerce, Science, Research, Education, Sports, Social Welfare, Charity and other subjects is the aim of the Section 8 Companies. To meet the special objectives, you need to progress with the Section 8 company registration first.
The primary feature of the section 8 agency is these companies are formed with the sole aim of making charity.
Usually,the profits of a subsidiary can be shared among the members. But for making special utilisation of profits in Section 8 companies, the members need to follow special provisions.
When the matter is related to the transformation of a Section 8 company to any other company, the board of directors is required to declare that no portion of the company’s income should be transferred to any of the members of the board. The rule is stipulated under Rule 22 (4) of the Companies Incorporation Rule, 2014.
Rule 22 (9) (C) of the Companies Incorporation Rule, 2014 declares that any profit or income that was existing from the previous year should be used first to pay the dues. The rule additionally states that if the section 8 firm is bound to receive any advance then the advance must be used for Investor Education and Protection.
In brief, the speciality or best feature of the section 8 association is that by any means, the profits cannot be shared with company members. You need minimal section 8 company registration fees along withPAN and TAN as your official document to complete the registration.
The consolidation of accounts is the amalgamated form of the entire finance of a particular business. The CFS (Consolidated Financial Statement) is bound to showcase the wealth of a holding company.
In case, a company has more than one subsidiary then according to Section 129(3) of the Companies Act,along withCFS (Consolidated Financial Statement) you need to submit the SFS (Statement Financial Statement) also.
Overall, this is a brief description of the consolidation of accounts.
After consolidating a holding company with a section-8 company, section 129 declares that the holding company can never possess the profit of the section-8 company.
Section 129 also declares that CFS or Consolidated Financial Statement should be prepared according to the accounting standards. Though section-8 companies deal with non-profit, they also have to file income tax returns with ITR-7.
The AS or ‘Accounting Standards’ rule is also applicable for the Section 8 company’s consolidation of account systems.
The AS 21 directly deals with the controlling and authoritative power of the Section 8 company. The company owners will directly or indirectly control the authority of the company through more than one-half of the voting power.
The AS 21 declares that the holding company should possess at least half of the shares of the Section-8 subsidiary company.
However, there is an exception under Para 11 of AS 21. The exception under Para 11 of AS 21 depicts that the control of the Holding company over the Section-8 subsidiary company is temporary and not permanent.
Other than AS 21, we have to be careful aboutInd AS or Indian Accounting Standards Act 110 . Ind AS 110  rule depicts that we have to check whether the Section 8 company is under the ambit of another company over which the holding company has any control.
Overall, this a brief description of what is Section 8 company and its features. A brief description of CFS, and SFS and an analysation of Section 129, AS 21, and Ind AS 110.
You may have understood how complex the process is associated with the consolidation of accounts of Section 8 companies. However, experts can assist you while your intention is to create the section 8 company registration.
You can take assistance from Online Legal India™ experts regarding how to make the section 8 company registration online complete.