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Compliances for a Private Limited Company

Updated: Aug 3, 2020

Companies Act, 2013 has many provisions set to regulate companies and to make sure that all the regulations of the act are abided by. Both private and public companies are bound by the provisions of Companies Law. These provisions are not limited to maintaining financial records and filing returns. Annual compliances are mandatory all companies. Let’s discuss in detail all the provisions for private company in this article

Every year a Private Company has certain compliances to go through. But a newly incorporated company has more compliances for the first year of incorporation.

Points covered in this article are

1. What is ROC-Compliances?

2. Mandatory ROC Compliances

3. Non-ROC Compliance

4. Penal action for non compliance

1. What is ROC Compliance?

ROC is a registered office under MCA which administers the Companies under Companies Act, 2013. There are 22 Registrar Of Companies all over India. ROC is appointed by the law to ensure the companies comply with all the regulations or requirements of the Act

2. Mandatory ROC compliances

1. First Board Meeting

Within 30 days of incorporating a Private Limited Company, first meeting along with the directors have to be held compulsorily.

2. Subsequent Board Meetings

Every year minimum of 4 Board meetings are to be held with a maximum gap of 120 days between two meetings. Minimum 2 directors or 1/3rd of total directors whichever is greater should be present at the meeting. The notice of meeting should be given at-least 7 days prior to the meeting.

3. Acknowledgement of Directors

On the first Board Meeting as a Director or first meeting of a year, the director should submit Form MBP-1 disclosing his concern/interest any change in disclosures

4. Filing MGT-14 of resolution and agreement

For certain resolutions under the 3 categories i.e, Board resolutions, Special resolutions and ordinary resolutions MGT-14 is required to be filed with ROC. Private companies are exempted from filing MGT-14 with regard to specific matters as prescribed by Companies Act, 2013

5. Appointment of Auditor

Every Private Limited Company has to appoint its first auditor in the first board meeting within 30 days of incorporation. The auditor appointment as such shall hold the office till completion of 1st AGM

6. Appointment of Subsequent Auditor (ADT-1)

In the first AGM, a next/subsequent auditor shall be appointed. The term of office in case of subsequent auditor is 5 years. A Form ADT-1 has to be filed by the company within 15 days of appointment. ADT-1 is not necessary for of first auditor

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7. Annual General Meeting

Holding an Annual General Meeting before 30th September every year is a mandatory provision for every company. The AGM should be held in the registered office on a day which is not a public holiday

8. Filing Annual Returns in Form MGT-7

Every company has to file MGT-7 within 60 days of Annual General Meeting. It shall contain details such as:

· Board meeting details

· Registered office of the company or principal place of business

· Directors and other personnel of the company

· Remuneration of Directors

· Details of shareholding and liability

9. Filing AOC-4 for financial statements

In order to file the financial statements for every year Form AOC-4 is used. Within 30 of conducting its Annual General Meeting a company should file its financial statements with Registrar of Companies

10. Application for KYC of Directors in Form DIR-3

Any person who wants to become a director of a company, an application has to be submitted in Form DIR 3

11. Declaration of commencement of business

Section 10A of Companies Act, 2013 states that a company having share capital shall not have any borrowing power unless a declaration in the Form INC-20A within 180 days of incorporation

3. Non-ROC Compliances for every year after incorporation

Except the above mentioned annual compliances, every company has to follow certain provisions under Companies Act, 2013. They are:

· Maintenance of all statutory books of accounts and financial statements

· Income tax return filing of the company

· Statutory audit by Chartered Accountant

· GST payment

· Other periodic due payments

4. Penal action for non-compliance

If any company makes default in ROC compliances, the responsible authorities of the company shall be penalised for the period of default. Fine will be imposed on daily basis for the period for which default shall continue

Following these annual compliance increases the shareholders and public’s trust on the company. In order to keep the operations of a company transparent in the eyes of law all these provisions were introduced.

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