Private limited companies are regulated by the Companies Act and in order to register a company one needs to follow certain legal procedures. Also, once the incorporation is done there are a set of stringent compliances that every company has to adhere to. The mandatory compliances post incorporation of companies are as follows:
Following are the mandatory documents to be submitted by the company’s Directors and shareholders (Indian nationals)
The Board of Directors is one of the most powerful bodies in a company. In any organization, the first board meeting has to be conducted within 30 days of its incorporation. There needs to be conducted a minimum of four board meetings in a calendar year, that is, at least one in every quarter. The gap between two consecutive meetings should not exceed 120 days. In the case of small companies with turnover not more than two crores, a minimum of two meetings must be held in a financial year. Important decisions related to the company are agreed upon in the board meeting.
As per Section 53 of the Companies Act, 2013 the share certificates issued must be delivered to the subscribers of memorandum within two months from the date of incorporation. If the shareholders surrender their allotted letters, the company should send share certificate to those members by registered post. The subscriber has to remit the agreed subscription amount within 60 days from the date of incorporation.
Upon receiving the certificate of incorporation the first thing a business has to do is appoint the first auditor of the company. This has to be done within 30 days from registering the company during the Board Meeting. The Auditor can hold the post until the end of the first Annual General Meeting. If the company fails to appoint the auditor, then the Board of Director should call for an Extraordinary Meeting by informing the members of the Board within 90 days.
Section 118 of the Companies Act and Rule 25 of Companies (Management and Administration) governs the aspect of the minutes of the proceedings. The meeting minutes must contain a fair summary of the proceedings and its conclusions. 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. If the Chairman fails to sign within the said period it is signed by a Director duly authorised by the board
The directors of the company can disclose their interest or concern with other companies or firms or other associations of individuals, including 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 imprisonment which may extend to one year, or with a minimum fine of Rs. 50,000/- which may extend to Rs. 1,00,000/- or with both.
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 it during 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 the Managing Director of the company and the Chief Executive Officer.
Every company should mandatorily prepare its annual return with Registrar of companies or RoC within 60 days of annual general meeting in MGT-7 that has to be signed by at least one director and 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.
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