Annual Compliances for Pvt Ltd Companies - An overview
All Private Limited companies in India are governed by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013. According to this act, every company, post incorporation, has to fulfil some, mandatory legal obligations. The compliance requirements are complex with each falling on different due dates and failing to meet them in a timely manner can greatly impact a company.
This may include paying heavy penalties (up to Rs. 1 lakh a year) or the companies and their directors getting blacklisted for a short period of time.
You should maintain a public record which consists of the company’s information which is called as the annual returns of the company, which will be available in the Companies Register. Every year, you are supposed to update the annual return companies regularly.
Benefits of filing mandatory compliances
- Improve operational performance
- Higher employee retention
- Better information governance
- Foster best practice
Filing Annual Compliance - A detailed process
Following are the mandatory compliances that private limited companies have to fulfil. At Vakilsearch our expert Chartered Accountants, Accounting & Taxation professionals and Company Secretaries will take care of all your compliance requirements. We offer the best-in-class legal consultation for your company. Our team will cover the following compliance requirements as mandated by the Ministry of Corporate Affairs.
1. Facilitation of Meeting of Board of Directors:
The first meeting has to be conducted within 30 days of incorporating a business after which four meetings shall be held every quarter in a calendar year. There should not be more than 120 days of gap between two consecutive meetings.
2. Preparation of Minutes of Proceedings of Meeting:
Every company needs to file its minutes of the meeting and it shall be preserved permanently to add value in case of any dispute. The Meeting Minutes will be maintained at the Registered Office.
3. Issuance of share certificates:
The company is required to issue share certificate to the subscribers of memorandum within 60 days of incorporation.
4. Filing of Disclosure of Director’s Interest and Declaration of Disqualification:
In the first Board Meeting, all the Directors are required to give disclosure about their interest in other business entity.
5. Filing Declaration of Commencement of Business with RoC:
This has to be done upon registration of the company. Form INC 20A mandatorily needs to be filed within 180 days from incorporation.
6. Facilitation of Annual General Meeting:
A company shall conduct at least one AGM each year. The first Annual General Meeting shall be held within nine months from the closing of the first financial year of the company. In other cases, it shall be within six months from the closing of the financial year.
For Eg: If a Company is incorporated on or before 31st December 2018, the First Annual General Meeting must be conducted within 9 months from the date of closing of 1st Financial Year ( 31.12.2018 - 31.03.2019), that is, by 31st December 2019.
If a Company is incorporated on or after 1st January 2019, First Annual General Meeting to be conducted within 15 months, i.e., by 31st December 2020.
7. Annual Return companies have to be e filed with the RoC within 60 days of the conclusion of AGM.
8. Quarterly compliance:
Every company has to hold a minimum of four meetings of its board of Directors, that is, at least one board meeting every quarter of the calendar year.
9. Statutory registrations:
All statutory registrations like GST, PF, ESI, IEC, etc. must be made.
As an advantage of working with the industry-leading experts, our team will watch all the amendments being made to the law and keep you updated and compliant. Our Accounting and Compliance team will work with you closely to identify all the requirements and complete the process on time.
What You Need To Know
Many businesses let their compliance requirements pile up, even though taking care of them involves much less effort than is often imagined. Staying disciplined from the initial days will be hugely helpful when looking for investment or a bank loan, as both would want to ensure that your business is compliant with the Registrar of Companies' (RoC's) requirements.
Having a company secretary on call throughout the year is essential in ensuring that your business is run in accordance with the laws in force. Our team would keep you up-to-date with all the changes made by the RoC throughout the year. This package is valid for 12 months from the date of payment, not from the start of the financial year.
FAQs on Annual Compliances for Pvt Ltd Companies
Yes, every company irrespective of the number of transactions has to get the compliance filings done. However, the process will be much simpler.
A private limited company can have a minimum of 2 directors and a maximum of 15. If there are more than 15 Directors appointed, the company has to file MGT-14 form and provide the SRN.
Balance sheet and Annual Returns have to be filed once a year. In addition, companies have to file Form 3 if there is Return of Allotment, Form No INC-22. If there is a change in the Registered Office; Form No DIR-12 for Change of Directors; etc.
The AGM has to be conducted at the registered office of the company or at any other place within the city, town or village wherever the registered office is situated. The Meeting should happen during the business hours (9 am-6 pm) on any day that is not a national holiday declared by the Central Government
Annual General Meeting must be conducted within the stipulated timelines.
However, if it is not conducted within the stipulated time frame, for the special reason, Registrar of companies may provide an extension for a period not exceeding three months, which can be applied before the last date for holding the AGM.
According to section 97 of Companies Act, 2013, if any default is made in holding the AGM of a company U/S 96, the Tribunal may, notwithstanding anything contained in this Act or Articles of Association of company, on the application of any member of company may call or direct the company to call Annual General Meeting of the company.
With the help of Section 97, if any company fails to call AGM and didn’t apply for an extension it can call AGM with the help of any member who can file the application to NCLT with Form NCLT-1.
In case of any default in complying with provisions of Sections 96 & 97 or failed in complying with any directions of Tribunal, the company and every officer of the company who is in default shall be punishable with fine which may extend to Rs. 1,00,000/- and in case of continuing default, with a further fine which may extend to Rs. 5,000 for every day during which such default continues.
Yes, the Board of Directors can appoint a person for alternate directors. But he/she must not have been holding a similar post in any other company.
Pursuant to Section 134 of the Companies Act 2013 and Rules made thereunder, the company shall be punishable with a fine between Rs. 50,000 and Rs. 25,00,000/- and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 3 years or with fine of mimimum Rs. 50,000 and maximum Rs. 5,00,000/- or with both.
Pursuant to Section 164 of the Companies Acy 2013, a Director will be disqualified/ not eligible for appointment of Director of Company if :
- He is of unsound mind and stands so declared by a competent court;
- He is an undischarged insolvent;
- He has applied to be adjudicated as an insolvent and his application is pending.
- He has been convicted by a court of any offence and sentenced to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence . However, if a person has been convicted of any offence and has served a period of seven years or more, he shall not be eligible to be appointed as a director in any company.
- An order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
- Has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;
- He has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or
- He has not paid any calls with respect to any shares of the company held by him, whether alone or jointly with others, and a period of six months has elapsed from the last day fixed for the payment of the call.
- The financial statements or annual returns are not filed for a continuous period of three financial years
- He has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.
- He has failed to acquire a Director Identification Number.
According to the Companies Act, Board Meetings can be conducted even outside of India. If required, Directors can participate through video conferencing or other audiovisual elements, provided there is a prior notification. The minutes of proceedings shall be duly recorded. However, there are certain matters restricted by the Act to be convened through a Video Conference Meeting.
A Director has to be physically present to attend at least one Board meeting of the company. In absence of the original director, an alternate director may be appointed to attend the meeting. If a director absents himself from all the Board Meetings of the Company, he has to be vacated from the Office of Directorship of the company.
Whenever a change occurs in the interest of Directors, the same has to be disclosed at the first Board Meeting held As per section 184, whenever any change occurs in the interest of Directors, disclosure of the same is required to be made at the first Board Meeting held after such change
The Companies Act 2013, allows one person to be the managing director in up to 2 companies at the same time.