Although Private Limited Company is the most popular form of starting a business, there are various compliances which are required to be followed once your business is incorporated.

Recently, Government strike off more than 2 Lakh companies and disqualified more than 3 Lakh directors for non-compliance of various provisions of Companies Act, 2013. Such type of historic action came at the time when government came to know about the various techniques used by corporate entity to evade taxes.

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Right from the time of its establishment, a start-up becomes submissive to the contrary statutory and regulative governing compliances. A business registered in India is asked to abide by the several annual statutory compliances laid down by the corporate body of laws like the Companies Act, 2013. Since a large number of start-ups are put on record as corporations, annual compliances of a private limited company become the most faced subject by growing businesses.

All the compliances provided under the Company Law may be divided in 2 parts for making it easy to understand Mandatory Compliances and Event Based Compliances.

We have elaborated below such compliances which a private limited company has to mandatory ensure:

Mandatory Compliances

1. Declaration of Commencement of Business

Every company is now required to file e Form INC-20A with Registrar of Companies within 180 days of its Incorporation for commencement of its business.

2. First Board Meeting

First Meeting of Board of Directors is required to be held within 30 days of Incorporation of Company. Notice of BM must be send to every director at least 7 days before the meeting.

3. First Auditor

First Auditor of the company shall be appointed by the BOD within 30 days of Incorporation who shall hold the office till the conclusion of 1st AGM. In case of First Auditor, filing of ADT-1 is not mandatory.

4. Issuing of Share Certificate

The Company is required to issue Share Certificates to the subscribers of memorandum within 60 days of Incorporation of Company.

5. Filing of Disclosure of interest by Directors

Every director at:

‐ First meeting in which he participates as director; or

‐ First meeting of Board in every FY; or

‐ Whenever there is change in disclosures shall disclose in Form MBP‐1 (along with list of relatives and concern of relatives in the Company as per RPT definition), his concern or interest in any company, body corporate, firm or other association of individuals (including shareholding interest).

Form MBP‐1 shall be kept in the records of the company.

6. Subsequent Board Meetings

Minimum 4 Board Meetings to be held every year with not more than 120 days gap between two meetings. In case of small company, it is sufficient to conduct only two Board Meetings.

7. Subsequent Auditor

The BOD shall appoint the auditor in first AGM of company who shall hold the office till the conclusion of 6th AGM and shall inform the same to ROC by filing ADT-1. The responsibility to file Form ADT 1 is that of the company and not of the auditor within 15 days from the date of appointment.

8. Annual General Meeting

Every Company is required to hold an Annual General Meeting on or before 30th September every year during business hours (9 am to 6pm), on a day that is not a public holiday and either at the registered office of the Company or within the city, town or village where the registered office is situated. A 21 clear days’ notice is required to be given for the same.

9. Filing of Financial Statements

Every Company is required to file its Financial Statements within 30 days of its Annual General Meeting with Registrar of Company in E-Form AOC-4. The same shall be digitally signed by one director and certified by CA/CS/Cost Accountant in Practice.

10. Filing of Annual Return

Every company is required to file its Annual Return with Registrar of Companies within 60 days of Annual General Meeting in E-Form MGT-7. A company having turnover of INR 50 Crore or more shall be certified by a Practicing CS in Form MGT-8.

11. Directors’ Report

Directors’ Report is to be filed covering all the information required for Small Company under Section 134 within 30 days of AGM along with Form AOC-4. It should be signed by the “Chairperson” authorized by the Board, where he is not so authorized by at least 2 Directors.

12. Filing of Financial Statements of a Foreign Co.

Every Foreign Company is required to file Annual accounts (consolidated financial statements/ global accounts) along with the list of all principal places of business in India within 6 months of close of the Financial Year.

13. Filing of Annual Return of a Foreign Co.

Every foreign company shall prepare and file annual return of the company in e-Form FC-4 within 60 days from the close of financial year.

Event Based Compliances

These are triggered based on happening of certain events. There is paperwork that needs to be done for the same and there are various deadlines for these tasks. In case of non-compliance or even a missed deadline there can be penalties, additional fees or a compounding of offence, etc. Hence, it is necessary that the happening of such events be tracked and compliances met with on time.

Particulars Form No. Time Limit
Change in Directors or KMP. (Appointment/ Resignation) DIR-12 Within 30 Days of such change
Increase in Authorized Share capital SH-7 Within 30 days of passing Ordinary Resolution
Increase in Paid up share capital (Issue of security) PAS-3 Within fifteen days from the date of the allotment
Change in registered office INC-22 Within fifteen days from the date of such change
Change in secured borrowing (Creation, modification and satisfaction of charge) CHG-1 All types of Charges within 30 days of its creation
Change of name of company INC-24 Within 60 days from the date of applying reservation of name in INC-1
Conversion of company INC-27
Filing of resolution and agreements MGT-14 Within 30 days from date of passing resolution
Removal of Director before Expiry ADT-2 Within 30 days from date of passing SR
Application for KYC of Directors DIR-3 KYC On or before 30th April of immediate next Financial Year (Annual Compliance)
Report for Disqualification of the Director DIR-9 To be filed by company within 30 days of such disqualification
Report of Deposits held as on 31st March DPT-3 On or before 30th June annually duly audited by auditor.

Conclusion

Clearly, running a business especially in the form of a private limited company is not something to be undertaken lightly, and requires both an ongoing investment of much time and effort, and significant knowledge of many financial and regulatory technicalities.

Compliance is a business asset that, if used in the right way, can bring companies competitive advantage, customer trust and ultimately return on investment. Compliance is not only ‘doing the right thing’, or ‘ticking a box’ but it is the way of working, part of the business, investor confidence, transparent and open culture. Remember, cost of non-compliance is always more than cost of compliance. There are established and competent professionals in the market today ready and willing to help you at every stage of the business cycle, not only in incorporation but with all the compliance and regulatory requirements through the long life of your organization.

Author Bio

Qualification: CA in Practice
Company: A.G. Resolve
Location: Jaipur, Rajasthan, IN
Member Since: 19 May 2020 | Total Posts: 2

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