The private limited company is amongst the most popular form of starting a business. Once your private limited company is registered, then you are required to follow many Compliances of Private Limited Company.
There is a list of some common Compliances of Private Limited Company that are mandatorily followed:
|Compliance Requirement||Description and Timeline|
|Appointment of Auditor||Auditor will be appointed for the 5 (Five) years and form ADT-1 will be filed for the 5-year appointment. From the date of incorporation of the company, the first Auditor will be appointed within one month.|
|Statutory Audit of Accounts||At the end of every financial year, every company is required to prepare its accounts and get the same audited by a Chartered Account. For the purpose of filing it with the registrar, the Auditor must provide an Audit Report and the Audited Financial Statements.|
|Filing of Annual Return (Form MGT-7)||Within 60 days of holding of Annual General Meeting, every private limited company is required to file its annual Return. Annual Return will be for the period 1st April to 31st March.|
|Filing of Financial Statements(Form AOC-4)||Within 30 days of holding Annual General Meeting, every Private Limited Company is required to file its Balance Sheet along with a statement of Profit and Loss Account and Director Report.|
|Holding 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.|
|Preparation of Directors’Report||Directors’ Report will be prepared with a mention of all the information required under Section 134.|
Determining 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 is the main purpose of the statutory audit.
- Appointment of the Statutory Auditors of the Company.
- Finalise Annual Accounts with the Auditors of the Company
Annual RoC Filings
- 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 of Private Limited Company are required to be made once a year.
- As a part of Annual Filing, the following forms are to be filed with the ROC:
- Form MGT-7 (Annual Return): Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.
- Form AOC-4 (Financial Statements): Every Private Limited Company is required to file its Balance Sheet along with the statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General 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.
- 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 the 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”, at least two Board Meetings shall be held in a calendar year (one meeting 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 the 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 at least 7 days in advance from the date of the meeting.
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 Directors’ Report format Compliances of Private Limited Company need to be followed for the smooth functioning of Company.
Income Tax Compliances of Private Limited Company
- Calculation and Quarterly Payment of Advance Tax
- Filing of Income Tax Returns (Tax will be payable at a flat rate of 30% plus Education Cess)
- Tax Audit – Mandatory in case sales, turnover or gross receipts of a business exceed Rs. One Crore in the previous year relevant to the assessment year.
- Filing of Tax Audit Report
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 at least eight financial years should be preserved and kept in good order.
Other Event-Based Filings
Besides Annual Filings, there are various other compliances which need to be done as and when an event takes place in the Company. Instances of such events are:
- Change in Authorised or Paid-up Capital of the Company.
- Allotment of new shares or transfer of shares
- Giving Loans to other Companies.
- Giving Loans to Directors
- Appointment of Managing or whole time Director and payment of remuneration.
- Loans to Directors
- Opening or closing of bank accounts or change in signatories of Bank account.
- Appointment or change of the Statutory Auditors of 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.
Non-Compliances of Private Limited Company
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.
There is an additional fee are required to pay if there is any delay in any filing. And it 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 subsequently revised filing shall be charged, assuming it as a new filing. Compliances of Private Limited Company need to be followed for the smooth functioning of Company.