Private Limited Company is required to follow various compliances once the business is incorporated.
Managing the day-to-day operations of the business along with complying with the rules and regulations can be a little taxing for a businessman.
Recently, the government struck off more than 2 Lakh companies from the register of the companies and disqualified more than 3 Lakh directors for non-fulfillment of compliance of various provisions of the Companies Act, 2013. The businessman must understand the legal requirements and ensure that such compliances are timely fulfilled without attracting any interest or penalty.
Following are some of the common compliances that a private limited company has to compulsorily ensure:
Company Name Board
Every Private Limited Company is required to paint or affix the Name Board that shows the name and address of the registered office of the company. This Name Board should be painted or affixed, outside every office of the company or any place in which the business of the company is carried on.
Company Letter Head
Every Company must get its name, registered office address, CIN, GST, telephone no, and e-mail printed on business letters head, bill books.
- A Private Limited Company must conduct the first meeting of the Board of Directors within 30 days from the day the company is incorporated.
- Minimum four Board Meetings must be held in every calendar year i.e. one meeting per quarter.
- A Private Limited Company classified as a “Small Company”, should conduct at least two Board Meetings that must be held in every calendar year i.e. one meeting every six months.
- Minimum 2 directors or 1/3rd of the total directors, whichever is higher, are required to be present in the meeting to meet the Quorum.
- “Minutes of the Meeting” is drafted that contains the discussions of the meeting and is maintained at the Registered Office of the Company.
- A minimum 7-day notice from the date of the meeting is given to the Directors, intimating them about the date and purpose of the meeting.
Appointment of the Auditor
In a Private Limited Company, the Auditor is appointed for 5-year terms. Form ADT-1 is filed for a 5-year appointment of the Auditor. The first Auditor has to be appointed within one month from the date of incorporation of the Company.
Issuing of Share Certificate
The Company must issue Share Certificates to the subscribers of the memorandum within 60 days from the date of the Incorporation of the Company.
- Every Director is to submit his consent in Form DIR‐2 and the same is filed with ROC, within 30 days of appointment.
- Every person intending to become a director is to apply to Central Government for DIN through electronic application in Form DIR-3.
- A person cannot be a director in more than 20 companies out of which a maximum number of public companies can be 10.
- The Company needs to file Form DIR‐12 with ROC in 30 days in case of resignation of the director and also puts resignation details on the website and in its Directors’ Report.
Statutory Audit Compliances
Statutory audit of bank statements, financial transactions, and bookkeeping records are conducted to conclude whether the Company is providing a real and accurate representation of its financial position. Annual Accounts are finalized with the Auditors of the Company
Annual RoC Filings
Every Private Limited Company must file its Annual Accounts and Returns comprising details of its directors, shareholders, etc. to the Registrar of Companies annually. The following forms are to be filed with the ROC as a part of the Annual Filing
Form MGT-7 (Annual Return): A Private Limited Company must file its Annual Return within 60 days of holding of AGM (Annual General Meeting). Annual Returns are prepared for the period starting from 1st April to 31st March.
Form AOC-4 (Financial Statements): A Private Limited Company is required to file its statement of Profit and Loss Account, Balance Sheet, and Director Report within 30 days of holding of AGM (Annual General Meeting).
Annual General Meeting
It is mandatory for every Private Limited Company is to hold an annual meeting of its shareholders within six months from the date of closing of the financial year with the primary agenda of approving of the financial statements, the appointment of auditors, declaration of dividends, appointment, and remuneration of directors, etc. The Annual General Meeting is to be held during business hours on a working day i.e., not a public holiday. The AGM takes place at the registered office of the company or a place within the city, town, or village in which the registered office of the company is located. Every Private Limited Company must hold an Annual General Meeting in every Calendar Year.
Every director if he or she had directorship in other companies must disclose it every year. This annual declaration is given in writing to the company in a specified Directors’ Report format that comprises all the information required under Section 134.
Income Tax Compliances
- The company needs to calculate and pay Quarterly Advance Tax.
- Annual Income Tax Returns should be filed within the specified period as directed by the govt. (Tax will be payable at a flat rate of 30% plus Education Cess)
- Mandatory In case the annual sales, turnover, or gross receipts of the business exceed Rs. One Crore the Tax audit is compulsory and the same should be filed.
Statutory Registers and Records
As per the Companies Act 2013, a Private Limited Company shall maintain various statutory registers and records. Register of shares, Register of Directors, Register of Members, etc. should be maintained. Besides, documents related to the incorporation of the company, Resolutions passed in the Board Meetings, Minutes of the Board Meetings and Annual General Meeting, etc. are also maintained by the Company.
These records are kept at the registered office of the company and members can inspect the same during business hours. The books of account of the company are preserved and kept in good order for at least eight previous financial years.
Besides various mandatory periodic filings, other compliances need to be fulfilled as and when an event takes place:
- Change in authorized capital or paid-up capital of the company.
- Allotment of new shares or transfer of shares.
- Conversion of the company.
- Giving loans to other companies.
- Giving loans to directors.
- Opening or closing of bank accounts or change in signatories of the bank account.
- Appointment or change of the statutory auditors of the company.
- Removal of the director before expiry
For all such events, different forms are filed within specified periods. It is necessary to fulfill these compliances on time otherwise additional fees or penalties might be levied.
If a company does not comply with the rules and regulations of the Companies Act, then the Company and its officials at default are punishable as per the Companies Act.
In case of delay in the filings, additional fees or penalty is required to be paid. In case any revisable Annual Filing Form is to be revised a revised filing can be done after paying the fee.