Article explains Compliance related to First Board Meeting, Appointment of First Auditor, Issue of Share Certificates, Opening of Bank Account, Commencement of Business, Filing of annual return (Form MGT-7), Filing of financial statements (Form AOC-4), DIN KYC, Holding annual general meeting, Books of Accounts and Maintenance of Registers.

1. First Board Meeting with 30 days of Incorporation

In compliance of Section 173(1) of Companies Act, 2013 (hereinafter called as the Act) every company shall hold the first meeting of the Board of Directors within thirty days of the date of its incorporation.

It must also be noted that, it has been mandated by section 184(1) of the Act that at the first board meeting of a company every director shall disclose his/her concern or interest in any company or companies or bodies corporate, firms, or other association of individuals in Form MBP-1.

Note: If a director contravenes section 184(1) such director shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to one lakh rupees, or with both.

Minimum Board Meetings to be held Annually

Type of Company Minimum Number of Board Meeting in a Financial Year
One Person Company, Small Company,  Dormant Company and  start-up private company one meeting in each half of a calendar year and the gap between the two meetings shall not be less than ninety days: (Notification Dated 13th June, 2017)
Section 8 Company one meeting within every six calendar months (Notification dated 5th june, 2015).
Specified  IFSC   private   and

public company

one meeting of the Board of Directors in each half of a calendar year.”. (Notification Dated 4th January 2017)
Other Company Four meetings every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board (Section 173)

Agenda of First Board Meeting

  • Consideration of Memorandum of Association, Articles of Association and Certificate of incorporation of the Company
  • Election of Chairman of the particular meeting.
  • Appointment of Chairman of Board of Directors.
  • To authorize a person to record the proceeding of Board Meetings. (As per Clause 7.3.1 of Secretarial Standard – 1)
  • To authorize a director of Company to certify and circulate certified copy of Board Minutes. (As per Clause 7.6.4 of Secretarial Standard – 1)
  • Taking note of the duties of Directors u/s 166 read with relevant rules of Companies Act, 2013.
  • To take note of the printing of new stationery and painting of new name plates as per the requirement of Section 12(3) of Companies Act, 2013.

(As per Section-12 (3) (a) there is need to print Name, Address of its registered office and the Corporate Identity Number along with Telephone Number, Fax number and e-mail and website address, if any)

  • To discuss about the uniform financial year and pass necessary board resolution for change in financial year, if necessary, as per provisions of Companies Act, 2013.
  • To authorize an officer of the Company to sign the contracts or any other document or proceedings requiring authentication by a Company as per Section 21 of Companies Act 2013.
  • To Register the Company under Shops & Establishment Act.
  • Authorize Director or Company Secretary, if any to read and disclose the notice of interest of director to be given in MBP-1
  • To consider the appointment of first auditor
  • To authorize the issue of Share Certificates to the Subscribers of Memorandum. Note: (This may or may not be agenda for first board Meeting. Because, Share certificate have to issue within 2 month from the date of incorporation. Therefore, according to circumstance this agenda can be take note in next Board Meeting)
  • To open Bank Accounts of the Company.
  • To approve Preliminary Expenses and preliminary contracts.
  • To authorize a Director to Maintain Books and Registers of the company at registered office.

2. Appointment of first Auditor

For Companies except Government Companies and Companies owned or controlled by  Government

In compliance of Section 139(6) of the Act, the first auditor of a company, other than a Government company, shall be appointed by the Board of Directors within thirty days from the date of registration of the company and in the case of failure of the Board to appoint such auditor, it shall inform the members of the company, who shall within ninety days at an extraordinary general meeting appoint such auditor and such auditor shall hold office till the conclusion of the first annual general meeting.

For Government Companies and Companies owned or controlled by Government

In terms of Section 139(7) of the Act, in the case of a Government company or any other company owned or controlled, directly or indirectly, by the Central Government, or by any State Government, or Governments, or partly by the Central Government and partly by one or more State Governments, the first auditor shall be appointed by the Comptroller and Auditor-General of India within sixty days from the date of registration of the company and in case the Comptroller and Auditor-General of India does not appoint such auditor within the said period, the Board of Directors of the company shall appoint such auditor within the next thirty days; and in the case of failure of the Board to appoint such auditor within the next thirty days, it shall inform the members of the company who shall appoint such auditor within the sixty days at an extraordinary general meeting, who shall hold office till the conclusion of the first annual general meeting.

Diagrammatical representation for appointment of First Auditor

Diagrammatical representation for appointment of First Auditor

3. Issue of Share Certificate within 60 days form Incorporation

Every Company shall issue share certificate within 60 days form the date of incorporation to the subscriber to the memorandum in Form SH-1 or as nearly as possible. [Section 56(4)]

Note: The share Certificate shall be issued vide a resolution passed by the board of directors.

After issue of Share Certificate, Company should pay stamp duty on issue of share certificate as per Stamp Act of the State, it can be paid via portal SHCIL online with necessary attachment. Delayed stamp duty payment shall attract impounding of share certificates under Stamp Act.

Penalty for Non-Compliance

Company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than ten thousand rupees but which may extend to one lakh rupees. [Section 56(6)]

4. Opening of Bank Account

There is no specific provision under the Act stipulating for time frame to open bank account, however, since companies under Section 56(4) are mandated to issue share certificates within 60 days of incorporation, it is consequent that the subscription amount shall be transferred within 60 days of incorporation and hence the bank account of the company shall also be opened within 60 days of incorporation.

5. Commencement of Business within 180 days from Incorporation

Section 10A of the Act, debars any Company incorporated after Companies (Amendment) Ordinance, 2019 having share capital from exercising the following powers:

1. Any kind of borrowing powers (whether short-term or long-term, whether secured or unsecured etc.)

2. Commence any business

Without compliance of the following:

1. filing a declaration or commencement form in Form INC-22A with 180 days from the date of incorporation to the effect that every subscriber has paid the value of the shares agreed to be taken by him, and

2. filing with the Registrar a verification of its registered office in Form INC-22 within 30 days from its incorporation [Section 12(2), it must be noted that INC-22 is needed to be filed only when the address for correspondence mentioned in Spice+ Form is not similar with the address of the registered office of the Company.

Note: The Ministry of Corporate Affairs vide General Circular No. 11/2020 dated 24/03/2020 provided an additional period of 180 days for filing INC-22A.

Effect of Non-Compliance

1. Penalty

The company shall be liable to a penalty of fifty thousand rupees (Rs. 50000) and every officer who is in default [Section 2(60)] shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding one lakh rupees.

2. Strike-off the name of Company

Where the Registrar has reasonable cause (judgments search) to believe that the company is not carrying on any business or operations, he may, without prejudice to the penalty, initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.

6. Holding of Annual General Meeting (AGM)

Section 96 of the Act mandates that every company other than a One Person Company shall in each year hold a general meeting as its annual general meeting within a period of nine months from the date of closing of the first financial year of the company and in case of subsequent AGM, within a period of six months (extendable upto 3 months by the registrar for special reasons), from the date of closing of the financial year and not more than fifteen months shall elapse between the date of one annual general meeting of a company and that of the next.

Further if a company holds its first annual general meeting as aforesaid, it shall not be necessary for the company to hold any annual general meeting in the year of its incorporation:

Every annual general meeting shall be called during business hours, that is, between 9 a.m. and 6 p.m. on any day that is not a National Holiday and shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situate.

However the annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance.

7. Filing of Annual Return within 60 days of Annual General Meeting

In accordance with Section 92 of the Act read with Rule 11 of Companies (Management and Administration) Rules, 2014, Every Company shall with in 60 days of AGM (if not held within 60 days from due date of AGM) file with the registrar a copy of Annual Return in Form MGT-7 and shall also place the same on its website, if any.

The Annual Return shall be signed by:

1. A director and

2. Company Secretary of the Company if any and

3. Practicing Company Secretary

Provided that One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.

Further Listed Companies and companies having paid-up share capital of ten crore rupees or more or turnover of fifty crore rupees or more, shall get the annual return certified in Form MGT-8 by a Company Secretary in practice.

Penalty for Non-Compliance

Defaulting company and its every officer who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of five lakh rupees.

A company secretary in practice who certifies the annual return otherwise than in conformity with the requirements of section 92 or the rules made thereunder, he/she shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

8. Filing of Financial Statements with 30 days of AGM

In accordance with Section 137 read with Section 134 of the Act, a copy of the financial statements, including consolidated financial statement, if any, along Auditor’s Report, Board Report and accounts of its subsidiary which have been incorporated outside India and which have not established their place of business in India, duly adopted at the AGM or adjourned AGM, shall be filed with the Registrar within thirty days of the date of AGM or adjourned AGM (if AGM not held within 30 days from the due date of AGM).

Unadopted financial statements shall be filed with the Registrar within thirty days of the date of AGM and the which shall be recorded as provisional till the duly adopted financial statements are filed.

One Person Companies shall file copy of the financial statements duly adopted by its member, within one hundred eighty days from the closure of the financial year

Penalty for Non-Filing of AOC-4 within prescribed time

The company shall be liable to a penalty of one thousand rupees for every day during which the failure continues but which shall not be more than ten lakh rupees, and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be shall be liable to a penalty of one lakh rupees and in case of continuing failure, with further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.

Form Applicability
AOC-4 Filing financial statement and other documents by companies other than NBFCs and Companies required to file consolidated Financial Statements.
AOC-4 XBRL Filing financial statement and other documents by company which has:

  • paid capital of Rs. 5 Crores or more.
  • annual turnover of Rs 100 Crores or more.
  • Companies listed with the stock exchange in India and its subsidiaries.
  • are required to prepare their financial statements in accordance with Companies (Indian Accounting Standards) Rules, 2015
AOC-4 CFS Form for filing consolidated financial statements
AOC-4 NBFC (Ind AS) Form for filing financial statement and other documents for NBFCs
AOC-4 CFS NBFC (Ind AS) Form for filing consolidated financial statements and other documents with the Registrar for NBFCs

9. DIN KYC

As per Rule 12A of Companies (Appointment and Qualifications of Directors) Rules, 2014, Every individual who holds a Director Identification Number (DIN) as on 31st March of a financial year shall, submit e-form DIR-3-KYC for the said financial year to the Central Government on or before 30th, September of immediate next financial year.

Provided further that where an individual who has already submitted e-form DIR-3 KYC in relation to any previous financial year, submits web-form DIR-3 KYC-WEB through the web service in relation to any subsequent financial year it shall be deemed to be compliance of the provisions of this rule for the said financial year. However, if the individual desires to update his personal mobile number or the e-mail address he shall update the same by submitting e-form DIR-3 KYC only.

Consequences of Non- Compliance

The DIN of an individual who does not intimate his particulars in e-form DIR-3-KYC within

stipulated time in accordance with rule 12A shall be deactivated.

The de-activated DIN shall be re-activated only after e-form DIR-3-KYC is filed along with fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014.

10. Maintenance of Registers

The Registers need to maintained and updated eventually and should be kept at the Registered Office of the Company. Some of the Registers are required to be kept open for inspection by Directors, Members, and Creditors and by other persons. A Company is required to provide the extracts from the Registers, if demanded by Directors, Members, and Creditors and by other persons on payment of specified fees.

Following is an illustrative list of registers required to be maintained:

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

11. Books of Accounts

Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting (Section 128).

The author may be reached at 9675899911 or [email protected]

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