Mandatory Compliances of Private Limited Company
If your company is registered in India, you must be aware of and adhere to the many requirements outlined by corporate laws, like the Companies Act 2013, for a private limited company. Since many startups register as businesses, annual compliance for a private limited company is a topic most expanding businesses are interested in learning about.
Over time, there have been significant changes to the private limited company’s compliance standards. According to the Companies Act of 2013, a private corporation must comply with the following regulations:
1. Beginning of a business
It is required to obtain the commencement of business certificate within 180 days of the company incorporation for all companies formed in India after November 2019 with a share capital.
If this is not done, the company would be fined Rs. 50,000, and the directors would be fined Rs. 1,000 daily.
2. Appointment of an auditor
Within 30 days of incorporation, all Indian-registered firms must engage a statutory auditor. If the company fails to name one, it will be prohibited from conducting business and will also pay a fine of Rs. 300 each month.
3. Board meeting
A private limited company must hold a board meeting within the first 30 days of its formation. The following topics must be covered in the discussion:
- Opening a bank account for the deposit of shareholder-received share capital
- Share certificate issuance: Form SH-1 must be signed by the company secretary and a director.
- Other related matters
4. Obtaining registration as necessary under several legislations
If required, a private limited corporation must register and receive licenses by the following laws:
- Registration for GST
- Code for import-export
- Registration of MSMEs (micro, small, and medium-sized businesses)
- Registration with the FSSAI
- Registration of trademarks
- Startup registration in India
- ISO accreditation
5. Conformity with ROC for a private limited company
Getting to a particularly significant and commonly requested question: Is filing with the Registrar of Companies (ROC) required for a private limited company?
Yes, private limited companies must comply with ROC regulations. The corporation and its directors risk fines and legal repercussions if they fail to comply with the ROC filing requirements.
To maintain good standing and adhere to regulatory requirements, private limited firms must ensure the timely and proper filing of all necessary documents and forms with the ROC.
Checklist for legal compliance for a private limited company
Several forms and returns must be filed annually under the compliance requirements for a private limited business under the Companies Act 2013. All private limited corporations are subject to the Income Tax Act of 1961 and must abide by its requirements.
The list of requirements for an Indian private limited corporation is as follows:
| S. No. | Form’s purpose | Form No. | Notice period/Due date |
|---|---|---|---|
| 1. | Annual financial statements: Financial statements must be filed in XBRL format if paid-up share capital is greater than 5 crore and revenue is greater than 100 crore. | AOC-4 | Within 30 days of the AGM |
| 2. | Annual returns: If the Pvt. Ltd. Company’s paid-up share capital exceeds 10 crore and its annual revenue exceeds 50 crore, it must get a certificate in form MGT-8 from an active company secretary. | MGT-7A (small companies and OPC), MGT-7 (others) | Within 60 days or before the due date of the AGM held |
| 3. | Disclosure of interest by a company director | MBP-1 | First board meeting of every financial year |
| 4. | Director’s non-disqualification disclosure to the business | DIR-8 | First board meeting of every financial year |
| 5. | Director’s KYC | DIR-3 KYC | 30th September of every year |
| 6. | Deposit returns | DPT-3 | 30th June of every year |
| 7. | Reappointment or casual vacancy of an auditor | ADT-1 | In case of reappointment or casual vacancy within 15 days of the AGM held or extraordinary general meeting, within which a new auditor is appointed. |
| 8. | Unpaid and unclaimed accounts and statements | IEPF-2 | Within 60 days or before the due date of the AGM held |
| 9. | Disclosing the beneficial owner | BEN-2 | Within 30 days of receiving the BEN-1 from the shareholder |
| 10. | Pending vendor payments if it’s an MSME | MSME-1 | Follows half-yearly return. Due dates:
1st April to 30th September is 30th October 1st October to 31st March is 30th April |
| 11. | Directors’ appointments and resignations: Any changes to the board of directors, including new appointments, resignations, or modifications to director information, must be filed within a certain amount of time. | DIR-12 | Not applicable |
| 12. | Share allotments: When new shares are issued, whether to raise money or for other reasons, the specifics of the allotment must be filed. | PAS- 3 | Not applicable |
| 13. | AGM: It is necessary to submit an AGM notice to the ROC. | 21 days before the AGM |
A thorough breakdown of the requirements for a private limited company
The majority of businesses must comply with the following regulations:
1. Facilitation of board of directors meetings
After a business is incorporated, it must hold its first meeting within 30 days. Thereafter, four meetings must be held each quarter throughout the year. Two meetings should not be separated by more than 120 days.
2. Preparation of the minutes of the proceedings of a meeting
The minutes of every meeting must be recorded and kept forever to be valuable in the event of a disagreement. The registered office is where the meeting minutes must be kept.
3. Issuance of share certificates
Within 60 days of its incorporation, the business must distribute share certificates to the memorandum’s subscribers.
4. Filing of declarations of disqualification and interest disclosures for directors
All directors must disclose their ownership stakes in other companies during the first board meeting.
5. Notifying the ROC that a business has begun operations
When the firm is registered, this must be done. It is mandatory to file Form INC 20A within 180 days of establishment.
6. Annual general meeting facilitation
A firm must hold at least one annual general meeting (AGM) every year. The first AGM must be convened within nine months following the end of the company’s first financial year. In other situations, it must happen within six months of the end of the fiscal year.
For instance, if a company is incorporated on or before December 31, 2020, the AGM for the fiscal year 2022 must be held no later than September 30, 2022, or within nine months of the year’s end. The AGM must be held within nine months after the year’s end if the firm was incorporated after this date.
7. Filing an annual return
Every firm must submit E-Form MGT-7, its annual return, to ROC within 60 days of its AGM. A practising company secretary must sign Form MGT-8 to certify a business’s turnover of INR 50 crore or more.
9. Quarterly compliance
Every corporation must hold at least four board meetings yearly or one every three months.
10. GST filings
A business registered for the goods and services tax (GST) must, at the very least, submit GSTR-1 and GSTR-3B monthly. Additionally, the GSTR-9 is a return that must be submitted annually.
11. TDS filings
Every company must submit a tax deduction at source (TDS) return in its quarterly statements to the Income Tax Department of India. The returns must be exact in every aspect.
12. Filings connected to payroll
Companies that comply with PF, ESI, and other payroll-related regulations must file monthly and quarterly filings.
What is the price of ROC compliance?
The price of ROC compliance for an Indian private limited company will depend on several variables, such as the size of the business, the extent of the compliance activities, the difficulty of the business’s operations, and the particular services you select to handle the compliance process. The standard price range begins at Rs. 4,000.
Does an audit of a private limited company have to be performed?
Yes, a competent chartered accountant must audit a private limited company’s financial accounts every fiscal year in India. The Corporations Act of 2013 outlines this rule, which applies to all private limited corporations regardless of size or turnover. The audit guarantees accuracy, completeness, and adherence to financial reporting standards.
Can I operate a small business without registration?
You cannot run a small business Without registering a legal body, such as a company or corporation. It’s commonly referred to as a sole proprietorship. You must, however, consider some legal repercussions related to it, such as legal identity, liability, tax repercussions, lack of credibility, constrained expansion, registration requirements, etc.
Is holding an AGM necessary?
Yes, as it gives shareholders and management a forum to talk about crucial issues about the business’s performance, finances, and future direction.
Conclusion
In this regard, one may also contact Govche India Pvt. Ltd.’s Kanakkupillai.com web portal, which is situated in Chennai. Your compliance needs will be handled by knowledgeable chartered accountants, accounting and taxation professionals, and company secretaries at Kanakkupillai.
