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Compliance refers to the capacity to follow instructions, a set of regulations, or demands.
A private limited company that was established in India must make sure that the requirements of the Companies Act, 2013, are properly followed.
The Companies Act of 2013 oversees the holding of board meetings and shareholder meetings, as well as the selection, training, compensation, and retirement of the company’s directors.
For registered Private Limited Companies, RoC compliance is required. The business must meet the yearly compliance requirement, regardless of overall revenue or capital investment.
All businesses that have been registered in India, including private limited companies, one-person businesses, limited corporations, and section 8 businesses, are required to maintain yearly compliances, including filing annual reports and income tax returns. Even though company registration is the most common way to launch a business, after the enterprise is incorporated, a number of compliances must be followed.
The entrepreneur may find it challenging to manage daily operations while adhering to the complex corporate regulations. Therefore, it is always preferable to seek the assistance of specialists and comprehend the legal requirements in order to ensure prompt fulfilment of these compliances and avoid penalties or fines.
| Compliance | Description |
|---|---|
| Commencement of business ( within 180 days) | For companies registered in India after November 2019, having a share capital, it is necessary to obtain a commencement if business certificate before commencing any business or exercising the borrowing powers. The commencement of business certificate must be obtained within 180 days of incorporating a Company. In case the individual fails to obtain this certificate, there is a penalty of Rs. 50,000 for the company Rs. 1000 per day for the directors for each day of default. |
| Auditor Appointment (Within 30 days) | All registered Indian Companies must appoint a Statutory auditor within 30 days of incorporation. If the company fails to appoint an auditor, the company won’t be allowed to commence business. Also, there is a penalty of Rs. 300 per month. |
| Income Tax Return | Income tax returns need to be filed on or before 30th September 2023 for the Financial year 2022-23. |
| MCA Form AOC-4 | The registered private limited companies must file MCA Form AOC-4 on or before 31st October 2023 for the FY 2022-23. Failure to file AOC-4 will attract a penalty of Rs. 200 per day of default or delay. |
| MCA Form MGT-7 | It is necessary to file MCA form MGT-7 on or before 30th November 2023 for FY2022-23. Failure to file MGT-7 attracts a penalty of Rs.200 Per day of default or delay. |
| DIN eKYC | All the directors of the company must be filed for the DIN eKYC or DIR-3 eKYC. In DIR-3 eKYC, the Director must provide a unique personal mobile number and a personal email address. There’s a penalty of Rs. 5000 in case of failure to file DIN eKYC. |
| Hold Annual General Meeting | For a private limited company, it is mandatory to hold an annual general meeting once a year. Companies are required to keep their AGM within six months from closing the Financial year. |
| Director’s report | Preparation of the Directors report will be done with all the information required under Section 134. The Director’s Report needs to be attached to the ROC Filings. |
The statutory audit compliances are carried to determine whether an organization provides accurate details of the financial position by examining the bank balances, bookkeeping records, and financial transactions.
The Private Limited Companies must file the annual accounts and returns disclosing the details of its shareholders, directors, etc., to the companies’ registrar.
As a part of the annual filing, the following forms are to be filed with the ROC:
Form MGT-7 (Annual returns) must be filed within 60 days of holding the annual general meeting.
Form AOC-4 (Financial statements) is to be filed by a private limited company within 30 days with the balance sheet and the statement of profit and loss account and Director report.
It is necessary to hold a meeting of the shareholders once every year within six months from the financial year’s closing.
AGMs are held for approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, commission, remuneration of directors, etc.
The meeting is held during business hours on a day that is not a public holiday. It shall occur at the registration of the company or the city, village, or town in which the registered office is situated.
It is mandatory to conduct the first meeting of the Board of Directors of a company within 30 days of incorporation of the company.
There should be four board meetings held every three months in which a minimum of 2 directors or 1/3 rd of the total number of directors, whichever is greater, are required to be present.
Further, the meeting’s discussion needs to be drafted and recorded in the minutes of the meeting and maintained at the company’s registered office.
A notice should be intimidated seven days in advance about the date and the purpose of the meeting.
The Director has to disclose details about his directorship in other companies every year. This can be done by giving a declaration in writing to the company every year. The Director’s Report needs to be attached to Form AOC-4 and uploaded to MCA portal.
Here are specific instances of such events:
To read in detail about the filings for the company - click here.
Starting a business in India requires compliance with various legal requirements, including registering the business, obtaining necessary licenses and permits, and complying with labor and tax laws. Some of the essential legal requirements for starting a business in India are as follows:
A company can appoint a statutory auditor either for five consecutive years or till the conclusion of the next Annual general meeting. Therefore, an appointment of the statutory auditor cannot be considered as a part of annual compliance.
A company is required to maintain the compliances once the company is incorporated. The auditor is to be appointed within 30 days. Additionally, there is income tax filing and annual return filing that is to be done every year.
The annual general meeting (AGM) is held for the management and the shareholders to interact with each other. The Companies Act,2013 makes it compulsory to hold meetings to discuss the yearly results and appoint auditors.
The statutory audit as the name suggests is a mandatory audit for all companies. All the entities that are unregistered under the Companies Act as Private or Public Limited Companies need to get the books of accounts audited every year.
The companies incorporated under the Companies Act,1956 are required to file the following documents with the ROC The balance sheet in form 23AC which is to be filed by all the companies Profit and loss account in form 23ACA which is to be file by all the companies.
The Private Limited Companies are required to file the annual accounts and the returns that disclose the details of the shareholder and the directors to the ROC.
After the AGM all the private limited companies are required to file the annual return within 60 days of holding the annual general meeting.
This filing is also a mode of communication between the shareholders and the company’s board of directors. Further, the form informs the shareholders about their investments and discloses all the financial transactions in the financial year. Further, this formality should be discharged within 30 days from the date of the annual general meeting. It should include the following:
Every company has MGT within 60 days from the date of conducting the Annual General Meeting. It should contain the following information:
These details will be open for public inspection in case of any dispute or any matter arising thereof. In case of default in filing the annual return, a fine of ₹100 will be imposed per day of default.
|
Actions |
Form No. |
Phase Limit |
|
Change in registered office |
INC-22
|
Within fifteen days from the date of such change |
|
Change in Directors or KMP
|
DIR-12
|
Within 30 Days of such change |
|
Increase in Authorized Share capital
|
SH-7
|
Within 30 days of passing Ordinary Resolution |
|
Filing of resolution and agreements
|
MGT-14
|
Within 30 days from date of passing resolution |
|
Increase in Paid up share capital (Issue of security) |
PAS-3 |
Within fifteen days from the date of the allotment |
|
Change in secured borrowing (Creation, modification and satisfaction of charge) |
CHG-1
|
All types of Charges within 30 days of its creation |
|
Application for KYC of Directors
|
DIR-3 KYC
|
On or before 30th April of immediate next Financial Year (Annual Compliance) |
|
ACTIVE (Active Company Tagging Identities and Verification) |
INC-22A |
On or before 25th April 2019 (Applicable to all companies registered before 31st December 2017) |
|
Declaration of Commencement of Business |
INC-20A
|
Within a period of 180 days of the date of incorporation of the company. (Applicable to companies incorporated after 2nd November, 2018.) |
|
Essentials |
Form No. |
Phase Limit |
|
Change in Directors or KMP |
DIR-12 |
Within 30 Days of such change |
|
Increase in Authorized Share capital |
SH-7 |
Within 30 days of passing OR |
|
Increase in Paid up share capital (Issue of security) |
PAS-3 |
Within fifteen days from the date of the allotment |
|
Change in registered office |
INC-22 |
Within fifteen days from the date of such change |
|
Change in secured borrowing (Creation, modification and satisfaction of charge) |
CHG-1 |
All types of Charges within 30 days of its creation |
|
Change of name of company |
INC-24 |
Within 60 days from the date of applying reservation of name in INC-1 |
|
Conversion of company |
INC-27 |
– |
|
Filing of resolution and agreements |
MGT-14 |
Within 30 days from date of passing resolution |
|
Removal of Auditor before Expiry |
ADT-2 |
Within 30 days from date of passing SR |
|
Application for KYC of Directors |
DIR-3 KYC |
On or before 30th April of immediate next Financial Year (Annual Compliance) |
|
Report for Disqualification of the Director |
DIR-9 |
To be filed by company within 30 days of such disqualification |
