Mandatory Compliance for Private Limited Companies

Last Updated at: November 04, 2019
6237

Registering a business as a private limited company is only the beginning. Once it is registered, there are specific rules and regulations that need to be adhered to by the business. In this post, we discover the 8 mandatory compliances, as set in Companies Act 2013, in detail.

Private limited companies fall under the Companies Act and incorporating it requires many legal procedures to be followed. After its incorporation, mandatory compliance under the Companies Act 2013 are provided here:

Below you’ll find the list of essential and start up friendly services like how to apply for food license, time take for trademark registration or procedure for Udyog Aadhaar registration.

 

  1. Meeting of the board of directors

The Board of Directors is one of the most powerful bodies in a company. Section 173 of the Companies Act discusses about the meeting of board of directors. In any organization, the first board meeting has to be conducted within 30 days of its incorporation. At least 4 board meetings should be conducted each year. The gap between 2 consecutive meetings should not exceed 120 days.

Get an expert guidance

  1. Issue of share certificates

As per Section 53 of the Companies Act, 2013 the share certificates issued should be delivered within 2 months from the date of allotment. If the shareholders surrender their allotted letters, the company should send share certificate to those members by registered post.

  1. Appointment of auditors

Section 139 of the Companies Act governs that the first auditor of the Private Limited company should be appointed by the board within 30 days from the date of registration. He can hold the post till the end of the first annual general meeting. If the board fails to appoint the auditor within 30 days, they can call for an extraordinary general meeting within 90 days and appoint their auditor. He will also hold the post till the end of the annual general meeting.

  1. Minutes of the proceeding of the board meeting and general meetings

Section 118 of the Companies Act and Rule 25 of Companies (Management and Administration) Rules 2014 governs with the aspect of the minutes of the proceedings. The minutes should contain a fair summary of the proceedings. After a board meeting/general meeting is concluded, every company should prepare, sign and keep minutes within 30 days. Minutes of the board meeting is signed by the chairman of the meeting or chairman of the next succeeding meeting. Minutes of the general meeting are signed by the chairman of the meeting within 30 days or if the chairman is

incapable to sign within the said period it is signed by a director duly authorised by the board

  1. Filing of disclosure of interest by Directors

Section 184 of the Companies Act, 2013 deals with the disclosure of interest by a director. It provides that every director at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern of interest in any company or association of individuals which shall include the shareholding. If a director makes a contract with the company and does not disclose his interest, it is considered as a breach of trust among the directors. Rule 9 of (Meetings of the board and its power) Rules 2014 provides that such disclosure shall be made in form MBP-1 and filed with the ROC in form MGT-14. If the Director fails to disclose his interest he shall be liable with an imprisonment which may extend to 1 year, or with a minimum fine of Rs. 50,000/- which may extend to Rs. 1,00,000/- or with both.

  1. Approval and signing of financial statements

 Section 134 of the Companies Act 2013 and Rule 8 and 9 of the companies (Accounts) Rules, 2014 deals with the financial statement and board report. Every company should file the financial statements within 30 days of its annual general meeting with RoC in AOC-4.  It contains Balance sheet (AOC-4.) for Filing of Financial Statement, Consolidated Financial Statement AOC-4 (CFS) for the Companies, which have Subsidiary Company, Associate Company, and Joint Ventures. Profit & Loss Account (AOC-4.) for Filing of Profit & Loss Account. Based on the financial statement of the company, the board shall prepare the report and submit in the general meeting. The financial statement should be approved by the Board of Directors and shall be signed by the chairperson of the company. The chairperson is authorised by the Board or by two directors out of which one shall be managing director of the company and the Chief Executive Officer if he is a director in the company, the Chief Financial Officer (if any) and the company secretary of the Company, (if any).

  1. Report by the Board of Directors

Section 134 of the Companies Act 2013 provides that the reports of the Board of Directors of every Company should be attached with the details of the company such as finances accounts and corporate social responsibility standards along with the balance sheet. This should be produced in every Annual General Meeting.

  1. Filing of annual returns

According to Section 92 of the Companies Act asks every company should mandatorily prepare its annual return with Registrar of companies within 60 days of annual general meeting in MGT-7 which should be signed by at least one director and is required to be certified by a company Secretary in practice.

If a private company fails to comply with the rules mentioned under the Act, every person who is responsible for the fault will be punishable with a fine.

Filing of annual returns, report by the board of directors, approval and signing of financial statements, filing of disclosure of interest by directors, minutes of the proceeding of the board and general meetings, appointment of auditors, issue of share certificates and meeting of the board of directors are the obligatory compliances for Pvt. Ltd. Firms.

Mandatory Compliance for Private Limited Companies

6237

Registering a business as a private limited company is only the beginning. Once it is registered, there are specific rules and regulations that need to be adhered to by the business. In this post, we discover the 8 mandatory compliances, as set in Companies Act 2013, in detail.

Private limited companies fall under the Companies Act and incorporating it requires many legal procedures to be followed. After its incorporation, mandatory compliance under the Companies Act 2013 are provided here:

Below you’ll find the list of essential and start up friendly services like how to apply for food license, time take for trademark registration or procedure for Udyog Aadhaar registration.

 

  1. Meeting of the board of directors

The Board of Directors is one of the most powerful bodies in a company. Section 173 of the Companies Act discusses about the meeting of board of directors. In any organization, the first board meeting has to be conducted within 30 days of its incorporation. At least 4 board meetings should be conducted each year. The gap between 2 consecutive meetings should not exceed 120 days.

Get an expert guidance

  1. Issue of share certificates

As per Section 53 of the Companies Act, 2013 the share certificates issued should be delivered within 2 months from the date of allotment. If the shareholders surrender their allotted letters, the company should send share certificate to those members by registered post.

  1. Appointment of auditors

Section 139 of the Companies Act governs that the first auditor of the Private Limited company should be appointed by the board within 30 days from the date of registration. He can hold the post till the end of the first annual general meeting. If the board fails to appoint the auditor within 30 days, they can call for an extraordinary general meeting within 90 days and appoint their auditor. He will also hold the post till the end of the annual general meeting.

  1. Minutes of the proceeding of the board meeting and general meetings

Section 118 of the Companies Act and Rule 25 of Companies (Management and Administration) Rules 2014 governs with the aspect of the minutes of the proceedings. The minutes should contain a fair summary of the proceedings. After a board meeting/general meeting is concluded, every company should prepare, sign and keep minutes within 30 days. Minutes of the board meeting is signed by the chairman of the meeting or chairman of the next succeeding meeting. Minutes of the general meeting are signed by the chairman of the meeting within 30 days or if the chairman is

incapable to sign within the said period it is signed by a director duly authorised by the board

  1. Filing of disclosure of interest by Directors

Section 184 of the Companies Act, 2013 deals with the disclosure of interest by a director. It provides that every director at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern of interest in any company or association of individuals which shall include the shareholding. If a director makes a contract with the company and does not disclose his interest, it is considered as a breach of trust among the directors. Rule 9 of (Meetings of the board and its power) Rules 2014 provides that such disclosure shall be made in form MBP-1 and filed with the ROC in form MGT-14. If the Director fails to disclose his interest he shall be liable with an imprisonment which may extend to 1 year, or with a minimum fine of Rs. 50,000/- which may extend to Rs. 1,00,000/- or with both.

  1. Approval and signing of financial statements

 Section 134 of the Companies Act 2013 and Rule 8 and 9 of the companies (Accounts) Rules, 2014 deals with the financial statement and board report. Every company should file the financial statements within 30 days of its annual general meeting with RoC in AOC-4.  It contains Balance sheet (AOC-4.) for Filing of Financial Statement, Consolidated Financial Statement AOC-4 (CFS) for the Companies, which have Subsidiary Company, Associate Company, and Joint Ventures. Profit & Loss Account (AOC-4.) for Filing of Profit & Loss Account. Based on the financial statement of the company, the board shall prepare the report and submit in the general meeting. The financial statement should be approved by the Board of Directors and shall be signed by the chairperson of the company. The chairperson is authorised by the Board or by two directors out of which one shall be managing director of the company and the Chief Executive Officer if he is a director in the company, the Chief Financial Officer (if any) and the company secretary of the Company, (if any).

  1. Report by the Board of Directors

Section 134 of the Companies Act 2013 provides that the reports of the Board of Directors of every Company should be attached with the details of the company such as finances accounts and corporate social responsibility standards along with the balance sheet. This should be produced in every Annual General Meeting.

  1. Filing of annual returns

According to Section 92 of the Companies Act asks every company should mandatorily prepare its annual return with Registrar of companies within 60 days of annual general meeting in MGT-7 which should be signed by at least one director and is required to be certified by a company Secretary in practice.

If a private company fails to comply with the rules mentioned under the Act, every person who is responsible for the fault will be punishable with a fine.

Filing of annual returns, report by the board of directors, approval and signing of financial statements, filing of disclosure of interest by directors, minutes of the proceeding of the board and general meetings, appointment of auditors, issue of share certificates and meeting of the board of directors are the obligatory compliances for Pvt. Ltd. Firms.

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