What are mandatory compliances for private limited companies?

Last Updated at: April 08, 2020
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What are mandatory compliances for private limited companies?

A private limited company is the most popular form of business entity. Private limited companies in India are governed by the Companies Act under the Ministry of Corporate Affairs (MCA). According to MCA, every private limited company is bound to fulfill the mandatory secretarial compliance filings or RoC compliance within the fixed due date to avoid penalties.  

In this article the following topics will be covered: 

  • What is RoC Compliance?
  • What are the mandatory RoC compliance for the Private Limited Company?
  • What is the list of RoC compliance?
  • Why should a private limited company do a RoC compliance?

What is RoC compliance?

RoC or Registrar of Companies is an office under MCA that deals with the administration of the Companies Act, 2013. RoC has been appointed under Section 609 of the Companies Act. It is the duty of the RoC to ensure private limited companies and limited liability partnership companies comply with the statutory requirements of the Act. RoC functions as registry records related to the companies registered with them. 

There are 22 Registrars of Companies spread across India. 

What are the mandatory RoC compliance filings for a Private Limited Company?

Here is a quick checklist of all the compliance: 

  • Board Meeting

There should at least be four board meetings conducted in a calendar year and in case of a private company the number is two. 1/3rd of the total number of directors or minimum 2 whichever is greater should be present at the meeting and be intimated at least 7 days prior about the agenda of the meeting. Minutes of the board meeting is to be kept at the registered office of the company.

  • Annual General Meeting (AGM)

One AGM should be held every year and a gap of 15 months should exist between two AGMs. The purpose is to discuss financial statement, appointment of auditor, declaration of dividend, remuneration, etc.

  • Appointment of the Auditor (Form ADT-1)

Companies must appoint their First Auditor within 30 days of incorporation. The First Auditor will be appointed for five years and the appointment must be filed using Form ADT-1. When an auditor is appointed by the company then within 15 days from the date of the Annual General Meeting, form ADT-1 is to filed with the registrar of the company. 

  • Director Disclosure

All the directors of the company are required to fill the form MBP-1 to disclose their interest in any other company. Such disclosure is to be made every year on the first Board Meeting.

Further, in case of appointment of a new director qualification of the director is to be taken as a declaration. Every Director of the Company in each financial year has to file with the Company disclosure of non-disqualification in Form DIR-8

  • Accounts to be audited by a statutory auditor

For preparing/verifying the annual report and financial statement and to get the financial report audited, company should have a statutory auditor who shall compulsorily audit the same.

Mandatory Annual Compliance Requirements of a Private Limited Company

  • Filing of Form Annual Returns (Form MGT-7)

Every company has to file Form MGT-7 within 60 days from the date of conducting Annual General Meeting. It should contain the following information:

  • Details of the meeting (Board meeting or members meeting)
  • Registered office and principal place of business along with other holdings and associate companies
  • Debenture holders/members including the changes made
  • Key managerial personnel, Directors and Promoters (mention the changes made)
  • Remuneration of Directors and Key managerial personnel
  • Details of the legal matters that the company is involved in
  • Penalty and fine imposed on the company
  • Shareholding pattern 
  • Debentures, shares and other securities 
  • Liability or indebtedness
  • Certification of compliance matters

The matter that is filed before the RoC are those which 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, fine of Rs 100 will be imposed per day for default.

  • Filing of Financial Statement (Form AOC-4 )

This is a mode of communication between the shareholders and the Board of Directors to inform them about their investment and make disclosure of all the financial transactions done. It is to be done within 30 days from the date of the Annual General Meeting. Particulars about the auditor and board meeting should be filed. 

It should include the following:

  • Details of the particulars on the Balance sheet. Balance sheet should be disclosed
  • Details of the Profit and Loss account
  • Details of the Corporate Social Responsibility
  • All the Related Party Transactions that the company have entered into
  • The audit report and any other miscellaneous transaction (directors report and secretarial audit) 

Statutory Audit of Accounts

Companies must prepare their accounts and get them audited by a Chartered Accountant at the end of the Financial year. Audit reports and financial statements should be filed with the Registrar. 

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Maintenance of Statutory registers

Maintaining statutory registers, Minutes of Board Meeting books, Minutes of AGM books, creditors meeting, debenture holder meetings are mandatory. 

Other non-RoC compliance

In addition to the above-mentioned mandatory compliance filings some of the non-RoC compliance for private limited companies are:

  • TDS/TCS payment 
  • GST payment and GST filing
  • Other payments of periodic dues 
  • Filing of quarterly TDS returns
  • Advance tax payment
  • Filing of IT returns
  • Filing of tax audit reports
  • Tax audits 

Why should a Private Limited Company file RoC compliance?

For any default in RoC compliance, the company and the officers responsible for such non-compliance shall be penalized for the period of default. Fine imposed will be on a daily basis and will be imposed for the period for which default continues. Further, in case of delay filing an additional fee is to be paid. 

To maintain shareholders and public trust, bring the company to a competitive advantage, to get regular returns on the investment made Private limited Company also known as small company or any other company should follow their mandatory RoC compliance. Compliance act as an asset for the business and to avoid confusion company is required to maintain a register to fill in all the statutory change.

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What are mandatory compliances for private limited companies?

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A private limited company is the most popular form of business entity. Private limited companies in India are governed by the Companies Act under the Ministry of Corporate Affairs (MCA). According to MCA, every private limited company is bound to fulfill the mandatory secretarial compliance filings or RoC compliance within the fixed due date to avoid penalties.  

In this article the following topics will be covered: 

  • What is RoC Compliance?
  • What are the mandatory RoC compliance for the Private Limited Company?
  • What is the list of RoC compliance?
  • Why should a private limited company do a RoC compliance?

What is RoC compliance?

RoC or Registrar of Companies is an office under MCA that deals with the administration of the Companies Act, 2013. RoC has been appointed under Section 609 of the Companies Act. It is the duty of the RoC to ensure private limited companies and limited liability partnership companies comply with the statutory requirements of the Act. RoC functions as registry records related to the companies registered with them. 

There are 22 Registrars of Companies spread across India. 

What are the mandatory RoC compliance filings for a Private Limited Company?

Here is a quick checklist of all the compliance: 

  • Board Meeting

There should at least be four board meetings conducted in a calendar year and in case of a private company the number is two. 1/3rd of the total number of directors or minimum 2 whichever is greater should be present at the meeting and be intimated at least 7 days prior about the agenda of the meeting. Minutes of the board meeting is to be kept at the registered office of the company.

  • Annual General Meeting (AGM)

One AGM should be held every year and a gap of 15 months should exist between two AGMs. The purpose is to discuss financial statement, appointment of auditor, declaration of dividend, remuneration, etc.

  • Appointment of the Auditor (Form ADT-1)

Companies must appoint their First Auditor within 30 days of incorporation. The First Auditor will be appointed for five years and the appointment must be filed using Form ADT-1. When an auditor is appointed by the company then within 15 days from the date of the Annual General Meeting, form ADT-1 is to filed with the registrar of the company. 

  • Director Disclosure

All the directors of the company are required to fill the form MBP-1 to disclose their interest in any other company. Such disclosure is to be made every year on the first Board Meeting.

Further, in case of appointment of a new director qualification of the director is to be taken as a declaration. Every Director of the Company in each financial year has to file with the Company disclosure of non-disqualification in Form DIR-8

  • Accounts to be audited by a statutory auditor

For preparing/verifying the annual report and financial statement and to get the financial report audited, company should have a statutory auditor who shall compulsorily audit the same.

Mandatory Annual Compliance Requirements of a Private Limited Company

  • Filing of Form Annual Returns (Form MGT-7)

Every company has to file Form MGT-7 within 60 days from the date of conducting Annual General Meeting. It should contain the following information:

  • Details of the meeting (Board meeting or members meeting)
  • Registered office and principal place of business along with other holdings and associate companies
  • Debenture holders/members including the changes made
  • Key managerial personnel, Directors and Promoters (mention the changes made)
  • Remuneration of Directors and Key managerial personnel
  • Details of the legal matters that the company is involved in
  • Penalty and fine imposed on the company
  • Shareholding pattern 
  • Debentures, shares and other securities 
  • Liability or indebtedness
  • Certification of compliance matters

The matter that is filed before the RoC are those which 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, fine of Rs 100 will be imposed per day for default.

  • Filing of Financial Statement (Form AOC-4 )

This is a mode of communication between the shareholders and the Board of Directors to inform them about their investment and make disclosure of all the financial transactions done. It is to be done within 30 days from the date of the Annual General Meeting. Particulars about the auditor and board meeting should be filed. 

It should include the following:

  • Details of the particulars on the Balance sheet. Balance sheet should be disclosed
  • Details of the Profit and Loss account
  • Details of the Corporate Social Responsibility
  • All the Related Party Transactions that the company have entered into
  • The audit report and any other miscellaneous transaction (directors report and secretarial audit) 

Statutory Audit of Accounts

Companies must prepare their accounts and get them audited by a Chartered Accountant at the end of the Financial year. Audit reports and financial statements should be filed with the Registrar. 

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Maintenance of Statutory registers

Maintaining statutory registers, Minutes of Board Meeting books, Minutes of AGM books, creditors meeting, debenture holder meetings are mandatory. 

Other non-RoC compliance

In addition to the above-mentioned mandatory compliance filings some of the non-RoC compliance for private limited companies are:

  • TDS/TCS payment 
  • GST payment and GST filing
  • Other payments of periodic dues 
  • Filing of quarterly TDS returns
  • Advance tax payment
  • Filing of IT returns
  • Filing of tax audit reports
  • Tax audits 

Why should a Private Limited Company file RoC compliance?

For any default in RoC compliance, the company and the officers responsible for such non-compliance shall be penalized for the period of default. Fine imposed will be on a daily basis and will be imposed for the period for which default continues. Further, in case of delay filing an additional fee is to be paid. 

To maintain shareholders and public trust, bring the company to a competitive advantage, to get regular returns on the investment made Private limited Company also known as small company or any other company should follow their mandatory RoC compliance. Compliance act as an asset for the business and to avoid confusion company is required to maintain a register to fill in all the statutory change.

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