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Annual Compliances for Private Limited Company

The term compliance describes the ability to comply with orders, set of rules, or requests.

A private limited company that has been incorporated in India must ensure the compliances concerning the Companies Act, 2013 are adequately met.

The Companies Act, 2013 regulates the appointment, qualification, remuneration, and retirement of the Company's Directors and other aspects such as conducting board meetings and shareholder meetings.

The RoC compliance for registered Private Limited Companies is necessary. Irrespective of the total turnover or the capital amount, the company must comply with the annual compliance requirement.

All companies registered in India like a private limited company, one person company, limited company, and section 8 company need to maintain the annual compliances like annual returns and income tax return each year. Though Company Registration happens to be the most popular form of starting a business, various compliances need to be followed once the business is Incorporated.

Managing the business's everyday operations while complying with the difficult corporate laws can be a task for the entrepreneur. So, it is always better to take the professionals' help and understand the legal requirement to ensure timely fulfillment of these compliances to waive off the penalties or fines.

Here, we will look at some of the Common compliances that a private limited company has to ensure mandatorily.

What are compliances to be maintained by the Private Limited Company?

The compliance requirement for Private Limited Company has changed drastically over the years. Following is the summary of the private limited company compliance due dates in 2021.

Compliance Description
Commencement of business ( within 180 days) For companies registered in India after November 2019, having a share capital, it is necessary to obtain a commencement if business certificate before commencing any business or exercising the borrowing powers. The commencement of business certificate must be obtained within 180 days of incorporating a Company.
In case the individual fails to obtain this certificate, there is a penalty of Rs. 50,000 for the company Rs. 1000 per day for the directors for each day of default.
Auditor Appointment (Within 30 days) All registered Indian Companies must appoint a Statutory auditor within 30 days of incorporation. If the company fails to appoint an auditor, the company won't be allowed to commence business. Also, there is a penalty of Rs. 300 per month.
Income Tax Return Income tax returns need to be filed on or before 30th September 2021 for the Financial year 2020-21.
MCA Form AOC-4 The registered private limited companies must file MCA Form AOC-4 on or before 30th November 2021 for the FY2020-21. Failure to file AOC-4 will attract a penalty of Rs. 200 per day of default or delay.
MCA Form MGT-7 It is necessary to file MCA form MGT-7 on or before 31st December 2021 for FY2020-21. Failure to file MGT-7 attracts a penalty of Rs.200 Per day of default or delay.
DIN eKYC All the directors of the company must be filed for the DIN eKYC or DIR-3 eKYC. In DIR-3 eKYC, the Director must provide a unique personal mobile number and a personal email address. There's a penalty of Rs. 5000 in case of failure to file DIN eKYC.
Hold Annual General Meeting For a private limited company, it is mandatory to hold an annual general meeting once a year. Companies are required to keep their AGM within six months from closing the Financial year.
Director's report Preparation of the Directors report will be done with all the information required under Section 134.

Statutory Audit Compliances

The statutory audit compliances are carried to determine whether an organization provides accurate details of the financial position by examining the bank balances, bookkeeping records, and financial transactions.

  • A statutory auditor of the company is appointed.
  • The auditors of the company will finalize annual accounts.

Annual ROC Filings

The Private Limited Companies must file the annual accounts and returns disclosing the details of its shareholders, directors, etc., to the companies' registrar.

As a part of the annual filing, the following forms are to be filed with the ROC:

Form MGT-7 (Annual returns) must be filed within 60 days of holding the annual general meeting.

Form AOC-4 (Financial statements) is to be filed by a private limited company within 30 days with the balance sheet and the statement of profit and loss account and Director report.

Annual General Meeting

It is necessary to hold a meeting of the shareholders once every year within six months from the financial year's closing.

AGMs are held for approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, commission, remuneration of directors, etc.

The meeting is held during business hours on a day that is not a public holiday. It shall occur at the registration of the company or the city, village, or town in which the registered office is situated.

Board Meeting

It is mandatory to conduct the first meeting of the Board of Directors of a company within 30 days of incorporation of the company.

There should be four board meetings held every three months in which a minimum of 2 directors or 1/3 rd of the total number of directors, whichever is greater, are required to be present.

Further, the meeting's discussion needs to be drafted and recorded in the minutes of the meeting and maintained at the company's registered office.

A notice should be intimidated seven days in advance about the date and the purpose of the meeting.

Directors Report

The Director has to disclose details about his directorship in other companies every year. This can be done by giving a declaration in writing to the company every year.

Income Tax Compliances

  • Quarterly payment of the advance tax
  • Filing of the Income Tax returns
  • Tax audit (mandatory in case the turnover or gross receipts of a business exceeds Rs. One crore in the previous year relevant to the assessment year.
  • Filing of the Tax Audit report.

Other event-based Compliances

Besides the annual filings, there are various other compliances that need to be compiled with on occurrence of any event in the company.

Here are specific instances of such events:

  • Change in the authorized capital or the paid-up capital of the company.
  • Allotment of new shares or transfer new shares
  • giving loans to other companies
  • giving loans to directors
  • Appointment of managing or whole-time Director and their payment
  • when a bank account is opened or closed, or there is a change in the signatories of a bank account.
  • if there is an appointment or change of the statutory auditors of the company

It is necessary to file different forms with the registrar for all such events within a specific period. In case of missing out on this, additional fees or penalties might be levied. Hence, it is necessary to meet such compliances on time.

Non-compliance

In case if a company fails to comply with the rules and the regulations of the Companies Act, then the company and its members who default shall be punishable with a dine for the period of which the default is continuing.

In case there is a delay in annual filing, additional fees are required to be paid. Hence, it is always better to fulfill the compliances on time.

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Dedicated Advisor

Your company will be assigned a dedicated Compliance Manager who will be a single point of contact to help you maintain the compliance for your company. You can get in touch with your Compliance Manager at anytime and get assistance on matters related to your Company’s compliance.

Accounting

All companies are required to maintain accounts and prepare financial statements at the end of each financial year. Our Compliance Manager will help your company maintain accounts and will prepare the financial statement for your business at the end of financial year.

Secretarial Services

Companies are required to conduct a minimum of four board meetings, an annual general meeting, Directors Report and Annual Report each financial year. Our Compliance Manager will help you prepare minutes of board meetings and create all secretarial reports.

MCA Annual Return Filing

Annual General Meeting should be held by a company within 6 months from the end of that financial year. And MCA annual return must be filed on or before September 30th. Our Compliance Manager will prepare all the documents and file your company’s MCA annual return.

Income Tax Return Filing

Income tax return of a company must be filed irrespective of income, profit or loss. Hence, even dormant companies with no transactions are required to file income tax return each year. Our Compliance Manager will prepare all the documents and file your company’s income tax return.

Frequently asked questions

Which form is to be file for the appointment of the statutory auditor?

Form ADT-1 is filed for appointing or replacing the Statutory Auditor.

Which form is attached to the Companies Director Report?

MGT-9 is attached to the company's director report, which is an extract of MGT -7

Are audited financial statements mandatory while annual filing of Private limited companies?

Audited financial statements are necessary for every company from its incorporation. The company must file the audited statements only.

Does the appointment of statutory auditor fall under annual compliance?

A company can appoint a statutory auditor either for five consecutive years or till the conclusion of the next Annual general meeting. Therefore, an appointment of the statutory auditor cannot be considered as a part of annual compliance.

What are the compliances for a private limited company?

A company is required to maintain the compliances once the company is incorporated. The auditor is to be appointed within 30 days. Additionally, there is income tax filing and annual return filing that is to be done every year.

Is it necessary to conduct the AGM?

The annual general meeting (AGM) is held for the management and the shareholders to interact with each other. The Companies Act,2013 makes it compulsory to hold meetings to discuss the yearly results and appoint auditors.

Is it mandatory to get a private limited company audited?

The statutory audit as the name suggests is a mandatory audit for all companies. All the entities that are unregistered under the Companies Act as Private or Public Limited Companies need to get the books of accounts audited every year.

How to file annual returns for a Private Limited Company?

The companies incorporated under the Companies Act,1956 are required to file the following documents with the ROC

  • The balance sheet in form 23AC which is to be filed by all the companies
  • Profit and loss account in form 23ACA which is to be file by all the companies.

Is audit report mandatory for all the private limited companies?

The Private Limited Companies are required to file the annual accounts and the returns that disclose the details of the shareholder and the directors to the ROC.

When is the annual return to be filed after the AGM?

After the AGM all the private limited companies are required to file the annual return within 60 days of holding the annual general meeting.

What is ROC compliance?

ROC is the officer governed by the MCA that deals with the functioning, the ROC has to ensure that the Private Limited Companies and the LLPs comply with the statutory requirement of the ACT. The registrar of the companies functions as the regulator for the companies registered with them.

IndiaFilings provides a comprehensive cloud-based CFO and compliance management service for small and medium-sized businesses. Our compliance service includes financial statement preparation, secretarial services, income tax return filing, and MCA annual return filing. Based on the requirement, as your business scales, we can also provide GST return filing services, TDS return filing services, advance tax computation, and payroll processing. Get in touch with an IndiaFilings Advisor to begin managing your company's compliance in an easy and hassle-free manner.

Last updated: Nov 23, 2021

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