We all know that doing business in India through a Private Limited Company has its own advantages (i.e. Limited Liability, the preferred structure for FDI, share capital-based ownership) as secured by the law in force viz. Companies Act, 2013. But before deciding that we should opt for Private Limited Company to carry out business it has also become necessary to know about its aftermath, what are the roles and responsibilities of its Director/Shareholder and what are the day to day or periodic compliance that needs to be complied with to avoid the hefty penalties.
In this story, I have tried to communicate the things via a newly registered Private Limited Company named AI Private Limited and its three Shareholders cum Directors, Mr. Techie, Miss. Techie and Mr. Witty (who hold 45%, 45% and 10% shares respectively in the company).
Background of the Company and its Directors cum Shareholders:
AI Private Limited was incorporated as on 07.06.2019 with the objects of providing Artificial Intelligence (AI) based solutions to its existing or prospective clients.
Mr. and Miss Techie are the IITians and majorly looks after the core operations of the Company i.e. developing the products and designing solutions for its clients. Mr. Witty is an MBA and looks after the non-core but equally an important side of the business i.e. Accounting, Marketing, Invoicing, Debtor and Creditor Management, Legal Compliance etc.
Mr. Witty keeps him updated about the market and economy sentiment on a daily basis through newspaper and other digital platforms, being a little bit curious in nature he googled “what needs to be done after company registration” and he found a plethora of articles, blogs containing the information, while going through various posts and blogs he came through an article written by Mr. Helper which was written in a very simple manner so after reading the whole article he decided to contact to Mr. Helper, who is a professional and has expertise in start-up consulting.
The conversation between them was:
Mr. W: Hi, Mr. Helper I am Witty and I read your post on the “post-incorporation compliance of private limited company” and it seems very useful to me.
Mr. H: Thank you, Mr. Witty. Tell me how can I help you?
Mr. W: I along with my two other co-founders registered a private limited company, a while ago and We want to do everything in a compliant and legal manner so that we can run our business smoothly.
Mr. H: That’s excellent Mr. Witty, very few people think this way, we will definitely assist you in this. To help you out we need some details from your end so that we can help you in the right manner.
Mr. Helper asked for the basic details of the company which Mr. Witty provided to Mr. Helper. Now with the mutual working and support, Mr. Helper identified some of the regulatory compliance and some maintenance compliance which needs to be complied with.
The chart submitted by Mr. Helper to Mr. Witty has been reproduced herein for your reference;
After receiving inputs from Mr. Helper, Mr. Witty started to keep track of every compliance of AI Private Limited.
Corporate Compliance is the process of making sure your company follow the laws, regulations, standards, and ethical practices that apply to your organization. The benefit of doing compliance is that it decreases your risk of fines, penalties, work stoppages, lawsuits or a shutdown of your business. There is famous saying that if you “If you think compliance is expensive, try non- compliance”
(This blog is authored by CS Akash Goel, Secretarial Consultant at Coherent Advisors)
Disclaimer: The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader. Before making any decision or taking any action, the reader should always consult a professional adviser relating to the relevant article posting.