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Compliances for Private Limited Companies under the Companies Act, 2013

A private limited company is the most popular form of business entity. Private limited companies in India are governed by the Companies Act under the Ministry of Corporate Affairs (MCA). Every private limited company has to follow numbers of compliance as laid down by various statutes and other regulatory bodies. These include but are not limited to the periodic filing of tax and other returns, holding the board and other meetings, maintaining statutory books and accounts etc.

Recently, Government strike off more than 2 Lakh companies and disqualified more than 3 Lakh directors for non-compliance of various provisions of Companies Act, 2013. Such type of historic action came at the time when government came to know about the various techniques used by corporate entity to evade taxes.

In this article we will discuss such important compliance for a Private Limited Company in India as mentioned under Companies Act, 2013.

Declaration of Commencement of Business:
  • All the companies incorporated on or after 02/11/2018 are now required to file e Form INC-20A with Registrar of Companies within 180 days of its Incorporation for commencement of its business.
Issuing of Share Certificate:
  • The Company is required to issue Share Certificates within 60 days from the date of Incorporation.
  • Where additional shares are allotted to the new or existing shareholders, the share certificates should be issued within two months from allotment date
  • In a case related to the share transfers, the share certificates should be issued to transferees within a period of one month of receipt of the instrument of transfer by such Company

Appointment Of Auditor

Appointment of First Auditor:
  • Companies must appoint their First Auditor within 30 days of incorporation.
  • The First Auditor will be appointed for five years and the appointment must be filed using Form ADT-1
  • When an auditor is appointed by the company then within 15 days from the date of the Annual General Meeting, form ADT-1 is to filed with the registrar of the company
Appointment of Subsequent Auditor:
  • The BOD shall appoint the auditor in first AGM of company who shall hold the office till the conclusion of 6th AGM and shall inform the same to ROC by filing ADT-1.
  • The responsibility to file Form ADT 1 is that of the company and not of the auditor within 15 days from the date of appointment.

Meetings

First Board Meeting:
  • First Meeting of Board of Directors is required to be held within 30 days of Incorporation of Company. Notice of BM must be send to every director at least 7 days before the meeting.
Subsequent Board Meetings:
  • There should at least be four board meetings conducted in a calendar year and in case of a private company the number is two.
  • 1/3rd of the total number of directors or minimum 2 whichever is greater should be present at the meeting and be intimated at least 7 days prior about the agenda of the meeting.
  • Minutes of the board meeting is to be kept at the registered office of the company.
Annual General Meeting:
  • Every Company is required to hold an Annual General Meeting on or before 30th September every year during business hours (9 am to 6pm), on a day that is not a public holiday and either at the registered office of the Company or within the city, town or village where the registered office is situated.
  • A 21 clear days’ notice is required to be given for the same.

Statutory Filing

Disclosure of interest by Directors:
  • Every director at:
    • First meeting in which he participates as director; or
    • First meeting of Board in every FY.
  • Whenever there is change in disclosures shall disclose in Form MBP‐1 (along with list of relatives and concern of relatives in the Company as per RPT definition), his concern or interest in any company, body corporate, firm or other association of individuals (including shareholding interest).
  • Form MBP‐1 shall be kept in the records of the company.
Filing of Financial Statements:
  • Every Company is required to file its Financial Statements within 30 days of its Annual General Meeting with Registrar of Company in E-Form AOC-4.
  • The same shall be digitally signed by one director and certified by CA/CS/Cost Accountant in Practice.
  • Contents of Financial Statements: Financial Statements include following:
    • Details of the particulars on the Balance sheet. Balance sheet should be disclosed.
    • Details of the Profit and Loss account.
    • Details of the Corporate Social Responsibility.
    • All the Related Party Transactions that the company have entered into.
    • The audit report and any other miscellaneous transaction (directors’ report and secretarial audit).
  • In case of a Foreign Co.
    • Every Foreign Company is required to file Annual accounts (consolidated financial statements/ global accounts) along with the list of all principal places of business in India within 6 months of close of the Financial Year.
Filing of Annual Return:
  • Every company is required to file its Annual Return with Registrar of Companies within 60 days of Annual General Meeting in E-Form MGT-7.
  • A company having turnover of INR 50 Crore or more shall be certified by a Practicing CS in Form MGT-8.
  • Contents of Annual Return:
    • Details of the meeting (Board meeting or members meeting).
    • Registered office and principal place of business along with other holdings and associate companies.
    • Debenture holders/members including the changes made.
    • Key managerial personnel, Directors and Promoters (mention the changes made).
    • Remuneration of Directors and Key managerial personnel.
    • Details of the legal matters that the company is involved in.
    • Penalty and fine imposed on the company.
    • Shareholding pattern.
    • Debentures, shares and other securities.
    • Liability or indebtedness.
    • Certification of compliance matters
  • In case of a Foreign Co.
    • Every foreign company shall prepare and file annual return of the company in e-Form FC-4 within 60 days from the close of financial year.
Directors’ Report:
  • Directors’ Report is to be filed covering all the information required for Small Company under Section 134 within 30 days of AGM along with Form AOC-4.
  • It should be signed by the “Chairperson” authorized by the Board, where he is not so authorized by at least 2 Directors.

Maintenance And Circulation Of Records

Statutory Audit of Accounts:
  • Companies must prepare their accounts and get them audited by a Chartered Accountant at the end of the Financial year.
  • Audit reports and financial statements should be filed with the Registrar.
Maintenance of Statutory registers:
  • Maintaining statutory registers, Minutes of Board Meeting books, Minutes of AGM books, creditors meeting, debenture holder meetings are mandatory.
Circulation of Financial Statement & Other relevant Documents:
  • Company will send to the members of the Company approved Financial Statement, Directors’ Report and Auditor’s’ Report at least 21 clear days before the Annual General Meeting.

Event Based Compliance

  • These are triggered based on happening of certain events.
  • There is paperwork that needs to be done for the same and there are various deadlines for these tasks.
  • In case of non-compliance or even a missed deadline there can be penalties, additional fees or a compounding of offence, etc.
  • Hence, it is necessary that the happening of such events be tracked and compliances met with on time.
Compliance Time Limit Form No.
Change in Directors or KMP. (Appointment/ Resignation) Within 30 Days of such change DIR-12
Increase in Authorized Share capital Within 30 days of passing Ordinary Resolution SH-7
Increase in Paid up share capital (Issue of security) Within 30 days from the date of the allotment PAS-3
Change in registered office Within 30 days from the date of such change INC-22
Application for registration of creation, modification of charge All types of Charges within 30 days of its creation or modification CHG-1
Change of name of company Within 60 days of approval of name INC-24
Conversion of company INC-27
Filing of resolution and agreements Within 30 days from date of passing resolution MGT-14
Removal of Auditor before Expiry Within 30 days from date of passing SR ADT-2
Application for KYC of Directors On or before 30th April of immediate next Financial Year (Annual Compliance) DIR-3 KYC
Report for Disqualification of the Director To be filed by company within 30 days of such disqualification DIR-9
Report of Deposits held as on 31st March On or before 30th June annually duly audited by auditor. DPT-3
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