Compliances for Private Limited Company
Keeping up with ever-changing annual compliances for Private Limited company can be taxing. From notifying authorities regarding management changes and keeping records of meetings, to appointing a director, various norms come into play to keep a private limited company legally operational. While following such compliances keeps penalties at bay, it also enables authorities to ensure the orderly management of such companies. With that being said, let’s explore annual compliances that apply to private limited companies in India.
Underlining ROC Compliances for Private Limited Company
Adhering to ROC compliance signifies following statutory and Companies Act provisions. ROC compliances for private limited companies are classified as follows:
Annual Compliance: These are yearly-based compliances that involve filing annual returns and sharing financial statements.
Event-Based Compliance: Event-based compliances are required to be fulfilled whenever a certain event occurs, such as appointing a director, removing officials, making changes to charter documents, etc.
Other Compliances: This category entails a wide spectrum of operational norms that do not belong to the above but are paramount for ensuring the company’s well-being from a legal standpoint. These include but are not limited to, director KYC updates, maintenance of statutory registers, etc.
Annual Compliances for Private Limited Company
Adhering to Annual Compliances for Private Limited Companies ensures holistic corporate governance. This not only solidifies the company’s presence but also reinforces transparency among stakeholders. Anyway, some common Annual Compliances for Private Limited Companies include:
INC-20A: Declaration for Commencement of Business
Post-November 2019, all companies with share capital are mandatorily required to secure a Commencement of Business Certificate before bringing the operation to life and borrowing funds. The Form INC-20A is used for this purpose and it must be filed within 180 days of incorporation. Non-adherence to this requirement could lead to penalties of Rs. 50,000 and Rs.1,000/day imposed on the company and directors, respectively.
Filing E-form ADT-1
Filing this form is mandatory once the company appoints the first auditor within 30 days of incorporation. Notably, the filing cannot be possible without the shareholders’ consent, which must be secured in the first AGM. This form must be filed within 15 days of the auditor’s appointment.
Board Meetings
The newly incorporated company must convene the first board meeting within 30 days of incorporation. Also, the company must convene at least 4 meetings comprising founding members and directors. A time gap of 120 days should be maintained between two such meetings. Decisions or consents that come into play in such meetings should be duly documented in minutes. Notably, an authority’s consent is required to convene such meetings. For this purpose, the company must notify the authority about the meeting seven days in advance.
Annual General Meeting (AGM)
The first AGM must come into play within 9 months from the first FY’s closure. The subsequent AGM must be convened annually within six months from the FY’s completion, ensuring a gap of 15 months between the two AGMs.
AGMs cater to key subject matters such as dividend declaration, financial statements, auditor’s appointment, director’s remuneration, etc. AGMs cannot be held outside office hours or on public holidays. The company’s registered office is the legal place to hold the AGM.
Annual ROC Filings
Private Limited Companies are obligated to file annual returns with ROC, sharing details concerning directors and shareholders. The company must file the given forms to stay compliant.
AOC-4: Filing of Financial Statements
This form helps companies to share financial statements with the authority. Its submission must be done within 30 days of the Annual General Meeting (AGM).
MGT-7 – Annual Returns
Form MGT-7 deals with the filing of annual returns and it must be filed within 60 days of the AGM.
DIR-12: Appointment/Resignation of Directors
This form is used whenever the management causes changes to the directorship’s position, either by appointing a new director or changing the one. The 30-day timeline is given to companies to file such a form.
DIR-3 KYC: Director KYC Submission
All the directors should mandatorily file this form, reinforcing their identity. The company must file such a form by September 30th each year provided their DIN was issued by Mar 31st and is active. Delay or non-filing of DIR-3 could incur a monetary penalty of Rs 5000.
DPT-3: Return of Deposits
DPT-3 helps companies share details with the RoC regarding deposits and other non-deposit receipts. The due date for filing this form is June 30.
Directors’ Report
Section 134 must serve as a basis for the director’s report, spanning all essential company information. Such reports require the approval of the chairperson or at least two directors.
Maintenance of Statutory Registers and Books of Accounts
Companies must document their key affairs that impact their growth and operation in one way or another. Documents like statutory registers and records, books of accounts, financial statements, and files are paramount to reinforce transparency.
Event-Based Compliances for Private Limited Company
Adherence to event-based norms is as important as following the annual compliances for private limited company. These include:
- Changes in the paid-up or authorized capital
- Allotment or transfer of new shares
- Issuing loans to other entities or directors
- Appointment of managing director
- Changes in the bank account’s signatories
- Opening or closing of a bank account
- Changes concerning statutory auditors
An Overview of Non-Registrar compliances
These regulatory obligations have nothing to do with the ROC but are vital for hassle-free business operations. They may be regulated by other governing bodies and laws. These include:
Payment of Periodic Tax Due:
- Goods and Services Tax (GST) liability
- Tax Deducted at Source (TDS)
- Tax Collected at Source (TCS)
- Advance Tax
- Professional Tax (PTax)
Filing of Periodic Returns:
- Filing of Provident Fund (PF) returns
- Quarterly TDS Returns
- Filing of Income Tax Returns
- Filing of professional tax (PTax) returns
- Filing of half-yearly (ESIC) returns
- Filing of Tax Audit Report
- Monthly/Quarterly/Annual GST Returns
Conclusion
Understanding Annual Compliances for Private Limited Company is paramount to staying compliant. Doing so will not only keep the stringent penalties at bay but also ensure hassle-free business operations. Of course, keeping up with such norms can taxing. That is why it is advisable to partner with an expert agency like Adviso.
Being a premier compliance partner, Adviso offers a number of services to clients dealing with compliances or registration woes. Connect with Adviso today to ensure an unmatched grasp over operational compliance, leading to better productivity.
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