Obtaining the Certificate of Registration for your Company is an exciting moment in your business start-up journey. Your Company is born as an artificial legal person with certain inherent features, rights, powers and liabilities. Shareholders are the owners and the Directors are the brains and organs of a Company. In other words, the Shareholders and Directors are the Parents and Guardians of a Company. As a Parent and Guardian, they are responsible for the actions and inactions of a registered Company and are personally responsible to answer the regulatory authorities for any non-compliance of any legal requirements by a Company.
Getting the Certificate of Incorporation is only a starting point for a series of compliances a company has to follow under various legislations in India from time to time. Once the process of incorporation of a company is complete, the directors and shareholders will have to be aware of the legal compliances involved post-incorporation of the company. Following are the significant actions which need to be taken post company incorporation:
> First board Meeting – Every company shall hold a meeting of the Board of Directors within 30 days from the date of its incorporation.
> Bank Account – Companies need to have a bank account even before approaching the authorities for company incorporation. Subscription money needs to be deposited in that account. Since the company is an artificial entity, the transactions cannot be done in the name of any natural person.
> Registered Office Address – Every company shall have a registered office and inform the same to the registrar within 30 days from the date of incorporation. This address shall be used to receive all official communication from the various authorities.
> Company’s Board– Every company is required to affix its name at all places from where it carries on its business operations. Company’s board will include the details like company’s name, Corporate Identification number, email-id, registered office address and contact number. It shall be displayed in the language which is generally used in the locality. Additionally, the company has to get a seal with its name engraved on it, letterheads with appropriate information and printed negotiable instruments.
> Auditor – The first auditor shall be appointed by the Board of Directors within 30 days from the incorporation of the company. Otherwise, the members shall appoint the auditor within 90 days at an extraordinary general meeting. The term of the first auditor shall be until the conclusion of the first annual general meeting.
> Disclosure of Interest– At the first board meeting, every director shall disclose his interest in any company/firm/body corporate/association of individuals as outlined in section 184(1) of the Companies Act 2013. Any changes in the disclosures shall be intimated to the board in its first meeting held during each financial year.
> Statutory registers– The Company is required to maintain statutory registers at the registered office of the company. The same shall be maintained in the prescribed form failing which the company will be subject to penalties.
> Share certificate – The share certificate shall be issued within a period of 2 (Two) Months from the date of Incorporation to the subscribers of Memorandum.
> Books of Accounts- Every company shall maintain proper books of accounts which shall represent an accurate and fair view of the state of affairs of the company. The double entry system shall be followed, and the accounting is done on an accrual basis.
> Commencement of business – The Company shall obtain a certificate of commencement of business by filing an e-form INC-20A within 180 days from the incorporation. There is a requirement to file a bank statement showing that every subscriber has paid the amount due on the shares.
‘These are the legal compliances which a company has to take care of during its first year of incorporation. Post that, the law requires corporates to report about their annual performance, additional capital raised and many other matters annually to keep a track on their financial activities and to make data about functioning of corporates available to public at large.’
Disclaimer: The entire contents of this document have been prepared based on the relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information.