Mandatory Compliances for a Private Limited Company in India

Mandatory Compliance for a Private Limited Company in India

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Although Private Limited Company is the most popular form of starting a business, there are various compliance which are required to be followed once your business is incorporated.

As you are aware about the applicability and ongoing amendments in Companies Act, 2013 that requires proper and timeliness compliance of rules and by laws related to company that includes annual year compliance which requires an company secretary support.

We have elaborated below some of the common compliance which a private limited company has to mandatory ensure:

Compliance Requirement Description and Timeline
Appointment of Auditor Auditor will be appointed for the 5 (Five) years and form ADT-1 will be filed for 5-year appointment.The first Auditor will be appointed within one month from the date of incorporation of the Company.
Statutory Audit of Accounts Every Company shall prepare its Accounts and get the same audited by a Chartered Accountant at the end of the Financial Year compulsorily. The Auditor shall provide an Audit Report and the Audited Financial Statements for the purpose of filing it with the Registrar.
Filing of Annual Return (Form MGT-7) Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.
Filing of Financial Statements (Form AOC-4) Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting.
Holding Annual General Meeting It is mandatory for every Private Limited Company Company to hold an AGM in every Calendar Year. Companies are required to hold their AGM within a period of six months, from the date of closing of the Financial Year.
Preparation of Directors’ Report Directors’ Report will be prepared with a mention of all the information required under Section 134.

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Statutory Audit

Statutory audit is a legally required review of the accuracy of a company’s or government’s financial records. The purpose of a statutory Audit is the same as the purpose of any other type of audit: to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.

  • Appointment of the Statutory Auditors of the Company.
  • Finalise Annual Accounts with the Auditors of the Company

Annual RoC Filings

  • Annual filing of Returns and Balance sheet of companies is a part of Annual e-filling done with Registrar of Companies i.e, RoC.
  • The Annual filing is compulsory for a Private Limited company, Public Limited Company, One Person Company and also for Limited Liability Partnership.
  • The Balance Sheet should be accompanied by Auditor’s Report, Cash flow Statement and Schedules to the Balance Sheet. This Balance Sheet and P& L account has to be signed by a Practicing Chartered Accountant along with his seal and Membership Number.

An Annual Return should consists of the following:

  • Authorized Capital.
  • Paid-up Capital.
  • Debentures issued if any.
  • Register of Members.
  • Register of Directors.
  • Details of Transfer of Shares.
  • The Annual Return has to be signed duly by the Directors of the Company and if the company is a listed Public Limited Company, then it should also be signed by the Company Secretary of the Company along with the Directors.
  • Private Limited Companies are required to file its Annual Accounts and Returns disclosing details of its shareholders, directors etc to the Registrar of Companies. Such compliances are required to be made once in a year.
  • As a part of Annual Filing, the following forms are to be filed with the ROC:
  1. Form MGT-7 (Annual Return) : Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.
  2. Form AOC-4 (Financial Statements) : Every Private Limited       Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting.

Annual General Meeting

  • Every Private Limited Company is required to hold a meeting of its shareholders once in every year within a period of six months from the date of closing of the financial year.
  • The primary agenda of an AGM includes approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, appointment and remuneration of directors etc.
  • The Annual General Meeting shall be held during business hours on a day which is not a public holiday and shall take place 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 situated.

Board Meetings

  • The First meeting of the Board of Directors of a Private Limited Company shall be conducted within 30 days from the date of Incorporation of company.
  • Further, minimum Four Board Meetings shall be held in a calendar year (one meeting in every 3 months).
    In case of a Private Limited Company which is classified as a “Small Company”, atleast two Board Meetings shall be held in a calendar year (one meeting in every half year)
  • Most of the startups fall within the category of “Small Company”.
  • Minimum 2 directors or 1/3rd of the total number of directors, whichever is greater, are required to be present in meeting of the Board of Directors. The discussions of the meeting need to be drafted and recorded in the form of “Minutes of the Meeting” and maintained at the Registered Office of the Company.
  • Directors should be intimated about the date and purpose of the meeting by giving a notice atleast 7 days in advance from the date of the meeting.

Directors’ Report

Every director has to disclose about his directorship in other companies every year. This shall be done by giving a declaration in writing to the company every year in a specified Directors’ Report format.

Income Tax Compliance

  • Calculation and Quarterly Payment of Advance Tax
  • Filing of Income Tax Returns (Tax will be payable at a flat rate of 30% plus Education Cess)
  • Tax Audit – Mandatory in case sales, turnover or gross receipts of a business exceed Rs. One Crore in the previous year relevant to the assessment year.
  • Filing of Tax Audit Report

Maintenance of Statutory Registers and Records

A Private Limited Company has to maintain various statutory registers and records as required by the Company law such as Register of shares, Register of Members, Register of Directors etc. Besides, Incorporation documents of the company, Resolutions of the meetings of the Board of Directors, Minutes of the Board Meetings and Annual General Meeting etc are also required to be preserved by the Company.

Such records are to be kept at the registered office of the company and shall be open for inspection to its members during business hours. Also, the books of account of every company relating to a period of atleast eight financial years should be preserved and kept in good order.

Other Event Based Filings

Besides Annual Filings, there are various other compliance which need to be done as and when any event takes place in the Company. Instances of such events are:

  • Change in Authorized or Paid up Capital of the Company.
  • Allotment of new shares or transfer of shares
  • Giving Loans to other Companies.
  • Giving Loans to Directors
  • Appointment of Managing or whole time Director and payment of remuneration.
  • Loans to Directors
  • Opening or closing of bank accounts or change in signatories of Bank account.
  • Appointment or change of the Statutory Auditors of the Company.

Different forms are required to be filed with the Registrar for all such events within specified time periods. In case, the same is not done, additional fees or penalty might be levied. Hence, it is necessary that such compliance are met on time.

Non-Compliance

If a Company fails to comply with the rules and regulations of the Companies Act, then the Company and every officer who is in default shall be punishable with fine for the period for which default continues. If there is delay in any filing, then additional fees is required to be paid, which keeps on increasing as the time period of non-compliance increases.

It should be noted that some of the Annual Filing Forms can also be revised but the fees for subsequent revised filing shall be charged, assuming it as a new filing.

Annual Compliance For Private Limited Company

As a part of Annual e-Filing, Companies incorporated under the Companies Act, 1956 are required to efile the following documents with the Registrar of Companies (RoC):

  • Balance-Sheet: Form 23AC to be filed by all Companies*
  • Profit & Loss Account: Form 23ACA to be filed by all Companies
  • Annual Return:Form 20B to be filed by Companies having share capital
  • Annual Return: Form 21A to be filed by companies without share capital
  • Compliance Certificate:Form 66 to be filed by Companies having paid up capital of Rs.10 lakh to Rs. 5 crore

Step by Step Process for Additional Attachments to form 23AC :

  • 1

    If the size of Form 23AC exceeds 2.5 MB, remove some attachments or split and attach only a small part of the attachment to limit the Form size to 2.5 MB. You can upload the remaining/ other parts of attachments separately using ‘Additional Attachment Sheet’ as below.

  • 2

    Download the ‘Additional Attachment Sheet’ from ‘Annual Filing Corner’ link on the homepage of MCA portal.

  • 3

    Enter the CIN and click ‘Pre-fill’ button to automatically fill the name and address of the Company in the eForm.

  • 4

    Fill the date of relevant Balance Sheet.

  • 5

    Select the type of document from the dropdown list and click ‘Attach’ button to ‘browse and select’ the file to be attached. You have the option to attach maximum 5 documents.

  • 6

    Fill the signatory details i.e. Designation and DIN/ Membership No.

  • 7. Affix the Digital Signature Certificate of the signatory
  • 8. Click ‘Verify’ button. In case of any error, rectify the same and repeat this step.
  • 9.Close the Form and save it again on prompting by the system. Please ensure that size of ‘Additional Attachment Sheet’ does not exceed 2.5 MB.
  • 10. If you wish to attach more attachments, please download a fresh Form and repeat the above steps. You have the option to upload maximum two ‘Additional Attachment Sheet’ against one Form 23AC.
  • 11.After uploading of Form 23AC on MCA portal, system will prompt for following options:

    1. File Form 23ACA

    2. File additional attachments to Form 23AC

  • 12. Select the second option and upload saved ‘Additional Attachment Sheet’.
  • 13. After uploading of one ‘Additional Attachment Sheet’, system will again prompt for making a selection. If you have the second ‘Additional Attachment Sheet’ for uploading, select the second option again and upload the same. Otherwise select the first option and upload Form 23ACA to complete the filing and proceed to ‘payment option’ screen.
  • 14. If you have uploaded two ‘Additional Attachment Sheets’ system will prompt you to file Form 23ACA to complete the filing and proceed to ‘payment option’ screen.

Important Points to Remember

  • 1. Balance Sheet and Profit & Loss Accounts are to be filed as two separate documents with different e-Forms;
  • 2. Each e-Form along with the relevant attachment(s) should be less than 2.5 MB.
  • 3. The Balance Sheet, Profit & Loss Account and Annual Return are filed as attachments to the respective e-Forms. A scanned copy considerably increases the size of the document besides being more expensive. You are therefore, advised to convert the Text file/ Excel sheets by using the PDF converter software (PDF conversion facility is also available on the MCA portal for business users) and upload these attachments as PDF documents.
  • 4. The MCA database in respect of Authorised Capital and Paid-up Capital needs to be verified by the respective Companies, as it may not be correct. The Companies are requested to apply for correction of Master Data, should they find any discrepancies. In the meantime, the Companies can declare the correct amount of Authorised Capital and Paid-up Capital in the respective annual filing Forms.

How to do the Filing Companies can do e-Filing in three different ways:

  • 1. The Company representative can upload the e-Forms on the MCA portal through the ‘Annual Filing Corner’ link (after registering oneself as a user of the portal) at his convenience from his office/ home. This is the most convenient way of e-Filing.
  • 2. The Company representative can prepare the e-Forms as per guidelines, get them digitally signed by the authorized signatory, copy them in a CD or a pen drive and visit the nearest “Registrar’s Front Office” (RFO). RFO staff will assist in uploading of e Forms on MCA portal. For addresses/ phone numbers of RFOs, please refer to the “Facilitation Centre” link on the homepage of MCA portal.
  • 3. The Company representative can also contact any of the Certified Filing Centers (CFCs) for the Annual Filing of e-Forms by paying the service charges to the CFCs. The details about the CFCs are available under the ‘Certified Filing Centre’ tab on the homepage of MCA Portal.