Annual Return Filing for Private Limited Companies

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All companies are required to file returns at the end of the financial year. Both small and large companies need to follow the same procedure. While many smaller entities tend to skip this altogether, it can lead to heavy fines from the Registrar and even to the blacklisting of the company’s directors. So do note what steps need to be taken to file the returns:

Maintain books of accounts

The Companies Act, 2013, makes it mandatory for companies to maintain the books of accounts in a specific format. It is also important for companies to maintain the books of accounts to have control over the business. With doing so, filing of service tax returns, making projections for the business, filing value-added tax (VAT) returns and even filing TDS returns would be difficult. All company accounts must hold the following information:

a. A detailed summary of all money received and spent by the company;
b. An account of all sales and purchases;
c. A summary of current assets and liabilities;
d. Any other financial transactions, such as payment of salaries.

Appointing an Auditor

There are certain compliances all new companies must fulfil. A requirement for the completion of these compliances is the appointment of an auditor. Every company has to appoint an auditor with the first month of the company’s registration. Any person who is a qualified chartered accountant (CA) or a firm of CAs can be appointed as the auditors. The following persons/entities cannot be appointed as the auditor of the company:

a) A corporate body
b) An officer or employee of the company
c) A person who is a partner or director of the company
d) A person who is indebted to the company
e) A person who is in whole-time employment elsewhere

The term of an auditor’s appointment ends at the conclusion of the company’s annual general meeting (AGM). The company can reappoint the same auditor.

The whole point of conducting the audit audit is to confirm that the information presented in the financial report, taken as a whole, reflects the actual financial standing of the organisation in a given year. While examining the financial report, auditors must follow auditing standards which are set by a government body. Once auditors have completed their work, they write an audit report, explaining what they have done and giving an opinion drawn from their work.

Conducting Annual General Meetings

The Companies Act, 2013, mandates that all companies except a one-person company hold an AGM every year. An AGM is a mandatory annual gathering of a company’s interested shareholders. At the AGM, the directors of the company present an annual report, which contains information for shareholders about its performance and strategy. Shareholders with voting rights vote on current issues, such as appointments to the company’s board of directors, executive compensation, dividend payments and selection of auditors.

File Returns Annually

Once the AGM is complete and the audited financial statements are adopted by the company, the returns must be filed with the Registrar. The filing of the audited financial statements in the format prescribed by the Ministry of Corporate Affairs is called the filing of the annual returns of a company. The returns must be filed within 60 days of the AGM date.

A lawyer with 14 years' experience, Vikram has worked with several well-known corporate law firms before joining Vakilsearch.