Although Private Limited Company is the most popular form of starting a business, there are various compliances which are required to be followed once your business is incorporated. Managing the day to day operations of your business along with complying the corporate laws can be little taxing for any entrepreneur. Hence, it is essential to take help of a professional and also understand such legal requirements to ensure timely fulfillment of compliances, without any levy of interest or penalty. We have elaborated below some of the common compliances which a private limited company has to mandatorily ensure:
• The First meeting of the Board of Directors of a Private Limited Company shall be conducted within 30 days from the date of Incorporation of company.
• Further, minimum Four Board Meetings shall be held in a calendar year (one meeting in every 3 months).
In case of a Private Limited Company which is classified as a “Small Company”, atleast two Board Meetings shall be held in a calendar year (one meeting in every half year)
• Most of the startups fall within the category of “Small Company”.
• Minimum 2 directors or 1/3rd of the total number of directors, whichever is greater, are required to be present in meeting of the Board of Directors. The discussions of the meeting need to be drafted and recorded in the form of “Minutes of the Meeting” and maintained at the Registered Office of the Company.
• Directors should be intimated about the date and purpose of the meeting by giving a notice atleast 7 days in advance from the date of the meeting.
Annual General Meeting
• Every Private Limited Company is required to hold a meeting of its shareholders once in every year within a period of six months from the date of closing of the financial year.
• The primary agenda of an AGM includes approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, appointment and remuneration of directors etc.
• The Annual General Meeting shall be held during business hours on a day which is not a public holiday and shall take place at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.
• Private Limited Companies are required to file its Annual Accounts and Returns disclosing details of its shareholders, directors etc to the Registrar of Companies. Such compliances are required to be made once in a year.
• As a part of Annual Filing, the following forms are to be filed with the ROC:
o Form AOC-4 : For filing Balance Sheet and Profit & Loss Account by all Companies
o Form MGT-7 : For filing Annual Return by Companies having share capital
• AOC-4 should be filed within 30 days from the date of Annual General Meeting. Form MGT-7 should be filed within 60 days from the date of Annual General Meeting.
Audit of the accounts
The purpose of a statutory audit is the same as the purpose of any other audit – to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.
• Appointment of the Statutory Auditors of the Company.
• Finalize Annual Accounts with the Auditors of the Company
Maintenance of Statutory Registers and Records
A Private Limited Company has to maintain various statutory registers and records as required by the Company law such as Register of shares, Register of Members, Register of Directors etc. Besides, Incorporation documents of the company, Resolutions of the meetings of the Board of Directors, Minutes of the Board Meetings and Annual General Meeting etc are also required to be preserved by the Company.
Such records are to be kept at the registered office of the company and shall be open for inspection to its members during business hours. Also, the books of account of every company relating to a period of atleast eight financial years should be preserved and kept in good order.
Compliance by Directors
Every director has to disclose about his directorship in other companies every year. This shall be done by giving a declaration in writing to the company every year in a specified format.
Other Event Based Filings
Besides Annual Filings, there are various other compliances which need to be done as and when any event takes place in the Company.
Different forms are required to be filed with the Registrar for all such events within specified time periods. In case, the same is not done, additional fees or penalty might be levied. Hence, it is necessary that such compliances are met on time.
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 delay in any filing, then additional fees is required to be paid, which keeps on increasing as the time period of non-compliance increases.
It should be noted that some of the Annual Filing Forms can also be revised but the fees for subsequent revised filing shall be charged, assuming it as a new filing