Every registered business in India is required to meet a range of obligatory compliances. A private limited company is a popular type of business ownership that offers limited liability, perpetual succession, and the capacity for equity fundraising. Many emerging companies and startups want to know about the regulatory standards that a private limited company needs to follow, as it is the most preferred type of entity for micro and mid-sized companies.
Here’s a list of the statutory compliances stipulated by the Companies Act 2013 that a private limited company must adhere to.
Statutory Compliance for Private Limited Company
Compliance for a private limited company involves adhering to the rules, notices, and orders issued by relevant authorities. The statutory compliances for a private company according to the Companies Act 2013 include the following:
1. Inception of Business
Companies enrolled in India after 2019 and funded by equity must obtain a commencement of business certificate within 180 days of the Company’s formation, which is obligatory. To acquire the certificate, filing of Form INC-20A is necessary. If one fails to avail themselves of this provision, it will result in a fine of Rs. 50,000 for the enterprise and a daily penalty of Rs. 1,000 for each Director for every day of non-payment.
2. Appointment of Auditor
An appointment of a statutory auditor by all registered companies is mandatory within 30 days following incorporation. In the event of non-appointment, the Company’s business operations will not be permitted, and a penalty of Rs. 300 per month will be incurred. The appointment also requires ratification by the shareholders at the first Annual General Meeting (AGM); subsequently, Form ADT-1, which validates the appointment, must be submitted to the Registrar of Companies (ROC) within 15 days.
3. Convening of Board Meeting
It is the responsibility of a private limited company to convene a board meeting within the first 30 days of incorporation. The specific points for discussion must focus on the following:
- Opening of a bank account to deposit the amount of share capital raised from shareholders.
- Allotment of share certificates – Form SH-1 signed by a director and Company Secretary
- Other associated matters.
In due course, companies must convene a minimum of four board meetings annually, ascertaining that the time between two meetings is relatively 120 days.
Additionally, the deliberations from the meeting must be drafted, recorded, and noted in the minutes, which are to be kept at the registered office of the Company.
The company needs to give out a heads-up at least seven days before about when the meeting will happen and what it’s for.
4. Annual General Meeting (AGM)
The company should set up the first AGM within nine months after the end of its first financial year. After that, they need to hold the AGM every year within six months of the financial year ending. This makes sure there are about 15 months between each AGM. This meeting will be held during business hours at the Company’s registered office.
AGMs are convened for the ratification of financial statements, the declaration of dividends, the appointment or Reappointment of auditors, the election of directors, and other matters.
Securing Registration under different Regulations If Necessary
A private limited company must secure Registration and permissions under various regulations as needed. For instances:
- Import Export Code
- GST Registration
- FSSAI Registration
- MSME Registration
- Trademark Registration
- ISO Certification
- Startup India Registration
Line-up of Legal Requirements under ROC Compliances for Private Limited Company
In pursuance of the Compliances for a Private Limited Company under the Companies Act 2013, there are different forms and returns to be submitted on an annual basis. The Income Tax Act of 1961 is relevant, and all private limited companies are required to comply with the Act.
Here is the catalog of Compliances for Private limited companies in India
| S. No | Form Purpose | Form No | Notice period/Due date |
| 1. | Annual financial Statements – If turnover exceeds 100 crores/paid-up share capital exceeds five crores, financial statements need to be filed in XBRL Format | AOC-4 | Within thirty days of the annual general meeting |
| 2. | Disclosure of Non-Disqualification by the Director to the Company | DIR-8 | Initial Board meeting of each Financial Year |
| 3. | Director KYC | DIR-3 KYC | 30th September of each year |
| 4. | Annual Returns – If the turnover exceeds ₹ 50 crores or the paid-up share capital exceeds ₹ 10, the Pvt Ltd company must acquire a certificate from a practicing company secretary in Form MGT-8 | MGT-7A (OPC and small companies), MGT-7 (others) | Within sixty days or before the deadline of the annual General meeting held. |
| 5. | Casual Vacancy/Reappointment of Auditor | ADT-1 | In the event of Casual vacancy or Reappointment within fifteen days of the Annual General Meeting conducted or Extraordinary general meeting, within which a new auditor is appointed |
| 6. | Disclosure of interest by the Director to the Company | MBP-1 | Initial Board meeting of each Financial Year |
| 7. | Deposit Returns | DPT-3 | 30th June of each year |
| 8. | Pending Payments to Sellers if it is an MSME | MSME-1 | Pursues half-yearly return. Due dates for –
1st April to 30th Sep is 30th Oct 1st Oct to 31st Mar is 30th Apr |
| 9. | Allotment of Shares – On grant of new shares, whether for garnering capital or other objectives, the particulars of the allotment must be filed | PAS-3 | Not applicable |
| 10. | Unpaid and Unclaimed Accounts Statements | IEPF-2 | Within sixty days before the deadline of the Annual General Meeting. |
| 11. | AGM – needed to file a notice of the Annual General Meeting (AGM) with the ROC | 21 days prior to the Annual General Meeting | |
| 12. | Appointment and Resignation of Directors – alterations in the board of directors, like appointments, resignations, or changes in director particulars, must be submitted within the given time | DIR-12 | Not applicable |
| 13. | Disclosing the Beneficial Owner | BEN-2 | Within thirty days of obtaining the BEN-1 from the shareholder. |
| 14. | Verification of Registered Office – needed to be filed only when the Company has not offered details of its registered office at the time of introduction | e-Form INC-22 | Within 30 days of incorporation |
| 15. | Grant of Share Certificate (s) to the members of Memorandum of Association – grant of Share Certificates to the members shall be accomplished instantly after allotment of shares by the adoption of Board Resolution | Form SH-1 | Within 2 months from the date of Incorporation |
| 16. | Declaration for Start of Business | e-Form INC-20A | Within 180 days of incorporation |
| 17. | Maintenance of Minutes Book | Minutes shall comprise all the details provided in SS-1 and SS-2.
The company shall keep separate Minutes Book for each Board and General Meeting |
On a regular basis |
| 18. | Register of Members | Form MGT-1 | On a periodical basis |
Event-Related Compliance for Private Limited Company
In addition to the annual filings, various other compliances must be met upon the occurrence of any event within the Company.
Here are exclusive instances of such events:
- Assignment of new shares or transfer of new shares
- Giving loans to directors
- When a bank account is opened or terminated, or there is an alteration in the signatories of a bank account.
- Alteration in the paid-up capital or the authorized capital of the company.
- Offering loans to other companies
- Appointment of whole-time or managing Director and their remuneration
- If there is a change or an appointment of the statutory auditors of the company
It is essential to submit different forms to the registrar for all such events within a given period. If this is omitted, additional penalties or fees may be charged. Therefore, it is essential to meet such compliances promptly.
Non-Registrar Compliance
These regulatory liabilities do not directly engage the ROC but are needed for lawfully operating businesses. Depending upon the character of the business, its size, and the industry in which the business operates, the company can be regulated by various regulatory bodies and regulations, including:
Periodic payment of Goods and Services Tax (GST) liability, Tax Collected at Source (TCS), Professional Tax (PTax), Tax Deducted at Source (TDS), and Advance Tax.
Periodic Returns Filing:
- Quarterly TDS Returns
- Filing of Tax Audit Report
- Filing of Provident Fund (PF) returns
- Monthly/Quarterly/Annual GST Returns
- Filing of Income Tax Returns
- Filing of half-yearly Employees’ State Insurance Corporation (ESIC) returns
- Filing of professional tax (PTax) returns
- Regulatory Assessment and Reporting: Compliance with different regulatory assessments and reporting requisites under various acts of law, like the Environment Protection Act, Factory Act, and Competition Act.
Wrapping Up
Annual compliance for private limited companies involves multiple layers of accountability. It demands diligent care for financial, legal, and regulatory obligations. By adhering to the checklist and appreciating the worth of various forms of compliance, private limited companies are able to assure efficient operations, legal security, and a healthy reputation within the market. Periodic compliance makes the Company immune to legal sanctions and enhances its credibility and operational effectiveness.
By following this comprehensive guide on compliance for private limited companies, business owners and financial managers can confidently navigate the challenges of compliance. It is helpful that they stay in the good book of all regulatory authorities.
In this ecosystem, Kanakkupillai offers specialized services in corporate and commercial laws, ensuring that companies stay compliant with numerous statutory and annual filings for seamless business operations and safe transactions. We provide a comprehensive roadmap for administering business payments, helping companies remain compliant while highlighting their core operations.
