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ANNUAL COMPLIANCE FOR PRIVATE COMPANY OTHER THAN SMALL COMPANY.

Companies incorporated in India are primarily regulated by the recently enacted Companies Act, 2013. The Companies Act, 2013, provides much legal compliance that is to be made by every company...

Companies incorporated in India are primarily regulated by the recently enacted Companies Act, 2013. The Companies Act, 2013, provides much legal compliance that is to be made by every company like reporting of financial results, reporting of changes in management, maintenance of statuary registers, auditing of accounts etc.

In this article, I will try to include all the mandatory compliances that are to be made by every Private Limited Company immediately after incorporation and yearly onward.  

Mandatory Compliances:

GENERAL POST INCORPORATION COMPLIANCES

1.Affix A Board Outside Registered Office:

Every Company shall affix a board outside the office stating its name and registered office address

2.Letter Heads:

Letter heads of the company with registered office name & address, CIN, Email-ID, Telephone, website (if any), fax etc., shall be printed.

Penalty: Rs.1000/- per day shall be imposed in defaulting company and on every officer in default for every day during which such default continues up to a Maximum limit of Rs.100000/-

3.PAN/ TAN:

The first requirement after the incorporation of a company is applying for a Permanent Account Number (PAN)/ Tax Deduction Account Number (TAN). According to the amendment made in incorporation procedure PAN & TAN is integrated with Incorporation through MCA website at the time of Incorporation. So no need to follow the separate procedure for PAN and TAN Application.

4.Bank Account:

After obtaining PAN, the company shall open a Current Account with a bank and the promoters shall contribute the subscription money to the said account.

5.Inward Remittances From Non-Residents:

In case the subscribers are nonresidents, the share subscription money shall come by way of Inward remittance. KYC and Inward remittance reporting are to be done within 30 days with the Authorized Dealer Bank. The AD Bank shall issue UIN no. Now, all these filings have to be done online. The link for the website has been provided below:

6.Issue Of Share Certificates

Company shall issue Share Certificates to the subscribers of Memorandum within 60 days from the date of company incorporation. Please ensure that Share subscription money is received before issuing Share certificates through proper banking channel.

Penalty: Company Shall be punishable with fine to the extent of Rs.5000/- up to maximum limit of Rs.25000/- and every officer in default shall be punishable with fine which shall not be less than Rs.10000/- but which may be extended to Rs.100000/-.

7.FC-GPR (in a case of Non-residents):

Form FC-GPR is to be filed within 30 days of allotment (issue of share certificates in this case) with the AD bank. This filing is done online now. The link for the website has been provided below:      

8.Stamp Duty

Stamp Duty is to be paid within 30 days of Issue of Share Certificates. Stamp Duty varies from State to State and is therefore determined by the place (state) in which the registered office of the Company is situated.

9.1ST Board Meeting:

In order to satisfy the requirement of appointing the 1st Auditor of the company within 1 month from the registration of the company (as per the requirement of Section 139(6) of the Companies Act, 2013), the Company shall convene its 1st Board Meeting within 30 days from the date of incorporation to consider the following matters:

1.Taking on record the Certificate of Incorporation/ maintain the copies of Incorporation documents,

2.Nothing of Registered Office address of the Company,

3.Nothing of 1st directors,

4.Approval of preliminary expenses,

5.Approval for opening of a Current Account,

6.Appointment of 1st Statutory Auditors,

7.Approval of Common Seal (if any), (use of Common Seal has been made optional since 2015).

8.Authorization for Statutory registrations.

10.Appointment of the first Auditor of the company within 30 days of Incorporation:

Section 139 (6) of the Companies Act, 2013 requires a Private Limited company to appoint its Auditor within 30 days from its Incorporation.

If Board of directors failed to do so then they shall inform the same to members and members are required to appoint company Auditor within 90 days at an EGM. The Auditor will have to hold office to completion of first AGM. The Company need not file Form ADT-1 as these provisions are applicable to auditors appointed under Section 139 (1) of the Companies Act, 2013.This means the filing of form ADT-1 is not required for First Auditor under Companies Act, 2013.

An auditor will be appointed for 1 year till the conclusion of first AGM except following.

  1. a) All Private Limited Companies with Paid-up Share Capital >= Rs. 20 crores, or,
  2. b) All Companies with Paid-up Share Capital less than the threshold limit mentioned above, but having public borrowings from financial institutions, banks or public deposits >= Rs. 50 crores

Will appoint an auditor for the 5 (Five) year and form ADT-1 will be filed for a 5-year appointment. After that, every year in AGM shareholder will ratify the Auditor but there is no need to file ADT-1

  • An individual as auditor for more than 1 term of 5 consecutive years; and
  • An audit firm as auditor for more than 2 terms of 5 consecutive years.
11.Service Tax/ VAT/ IEC Registrations:

All the statutory registrations like Service Tax, VAT, IEC (Import Export Code) etc. may be applied for, depending on the type of the Company.

12.Provident Fund:

A company employing more than 20 employees is liable to deduct PF contribution @ 12% of basic salary & ESIC @ 4.75% of salary(As per the latest notification, ESIC has raised the threshold wage limit from 15,000 to 21,000).

13.Maintain Statutory Registers, Minute Books:

Company shall maintain all the statutory books, registers and minute books as stated in the Companies Act, 2013. Non-maintenance shall attract penal provisions.

14.Register Of Members

The name of the subscribers to be entered in the Register of Member with a date of incorporation of the company as the date when subscribers are deemed to have become members of the company.

ANNUAL COMPLIANCES

1.Meeting of Board of Directors:

The Company is required to hold 4 meetings in every financial year in such a manner that the gap between 2 Board Meetings should not be more than 120 days. There should be 1 Board Meeting in one-Quarter.

Two directors should be present at the board meeting, or if there are more than two directors, 1/3rd of the total directors should attend the board meetings.

2.Annual General Meeting:

It is mandatory for every Private Limited Company to hold an AGM in every Calendar Year. Companies are required to hold their AGM within a period of six months, from the date of closing of the Financial Year. The time gap between two AGM should not exceed 15 Months. First AGM can be held within 18 months from incorporation date.

The AGM should not be held on public holidays. It should be held during business hours and at the registered office of the company, whether it is a city or village.

3.Minutes of proceedings of Meeting of Board of Directors, General Meeting: 

It is mandatory for every company to cause minutes of the proceedings of every meeting of Board of Directors, General meeting within 30 days of the conclusion of meeting concerned. Minutes should be entered in the Minutes Book within thirty days from the date of conclusion of the Meeting.

Minutes of the Meeting of the Board or Committee should be signed and dated by the Chairman of the Meeting or the Chairman of next Meeting.

Minutes of a General Meeting should be signed and dated by the Chairman of the meeting or in the event of death or inability of the Chairman, by any director duly authorized by the Board for the purpose, within thirty days of the General Meeting.

4.Filing of Disclosure of interest by Directors & Disclosure regarding Non-Disqualification:

Director of every company is required to give disclosures about their interest in any other business entity in first Board Meeting in which they participate as a Director and thereafter in First Board Meeting of every financial year in FORM MBP-1 to the Company.

Every Director of the Company in each Financial Year will file DIR -8 (disclosure of non-disqualification) with the Company.

5.Filing of Financial Statements or Financial Results:

Every Company is required to file its Financial Statements within 30 days of its Annual General Meeting with Registrar of Company in E-FORM    AOC-4.

6.Filing of Annual Return:

It is mandatory for every company to file its Annual Return with Registrar of Companies within 60 days of Annual General Meeting in E-FORM MGT-7.

Annual Return of the Company whose paid up share capital is Rs. 10 Crore or more or turnover of Rs. 50 crore or more shall be certified by a Company Secretary in Practice in form of MGT -8.

7.Appointment of Auditor:

An Auditor will be appointed for a term of One year in AGM for next fiscal year and the company needs to file form ADT -1 within 15 days from AGM date.

The auditor will be appointed for the 5 (Five) year and form ADT-1 will be filed for a 5-year appointment. After that, every year in AGM shareholder will ratify the Auditor but there is no need to file ADT-1.

  • An individual as auditor for more than 1 term of 5 consecutive years; and
  • An audit firm as auditor for more than 2 terms of 5 consecutive years.

The Companies to which the above provision is applicable are:

a)All Private Limited Companies with Paid-up Share Capital >= Rs. 20 crores, or,

b)All Companies with Paid-up Share Capital less than the threshold limit mentioned above, but having public borrowings from financial institutions, banks or public deposits >= Rs. 50 crores.

8.Maintenance of Statuary Registers:

Following registers are required to be maintained by every company:

  • MGT-1: Register of Members
  • MGT-2: Register of Debenture Holders
  • MGT-3: Foreign register of members, Debenture Holders other security holders or beneficiary residing outside India
  • FORM SH-2: Register of renewed and duplicate share certificate
  • FORM SH-3: Register of Sweat Equity Shares
  • FORM SH-6: Register of Employee Stock Options.
  • FORM SH-10: Register of Shares or Securities bought back
  • FORM CH-7: Register of Charges

Non-Compliance

If a Company fails to comply with the rules and regulations of the Companies Act, then the Company and every officer who is in default shall be punishable with fine for the period for which default continues.

If there is a delay in any filing, then additional fees are required to be paid, which keeps on increasing as the time period of noncompliance increases.

The Additional Filing fees depend upon two factors namely Normal filing fees and the time period delay in filing forms.

Period of Delay Additional Fees
Up to 30 days 2 times of normal fees
>  30 days up-to 60 days 4 times of normal fees
>  60 days up-to 90 days 6 times of normal fees
>  90 days up-to 180 days 10 times of normal fees
More than 180 days 12 times of normal fees
Summary
ANNUAL COMPLIANCE FOR PRIVATE COMPANY OTHER THAN SMALL COMPANY.
Article Name
ANNUAL COMPLIANCE FOR PRIVATE COMPANY OTHER THAN SMALL COMPANY.
Description
Companies incorporated in India are primarily regulated by the recently enacted Companies Act, 2013. The Companies Act, 2013, provides much legal compliance that is to be made by every company like reporting of financial results, reporting of changes in management, maintenance of statuary registers, auditing of accounts etc.
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Venture care
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