Private Limited Company Compliances

Ask anyone with experience, and he’ll tell you running a company is no easy task, certainly not for the faint of heart. Besides all the business stress involved and all the financial pressure to handle, you have customers demanding payment, employees expecting salaries, clients pushing for performance, and that’s enough in itself to make anyone snap. But even all of this is perhaps not so much of a headache for entrepreneurs as the massive legal and regulatory requirements the government expects you to fulfill as a private limited company. Let’s look at a few of these.

Below are a list of just some of the compliances every private limited company is mandatorily required and expected by the law to fulfil.

Board Meetings

At least four board meetings need to be held in a year and at least one meeting needs to be held every quarter. Presence of the directors is needed for the meeting. Quorum is 1/3rd or 2 Directors whichever is greater. The meetings need to be logged and the signed minutes need to be maintained at the Registered Office.

Annual General Meeting (AGM)

This is a shareholders meeting that needs to be held every year. Approval of financial statements, declaration of dividends, appointment of auditors, etc. is the primary agenda for this meeting. AGM needs to be held in the city where the registered office of the company is situated.

Annual Filing of Forms

There are a number of annual forms that need to be filed besides the annual financials. The information is quite detailed and talks about shareholdings, directors, financials, etc. All these forms are required to be certified by a practicing Chartered Accountant or practicing Company Secretary. Companies having paid up share capital in the range of INR 1 million to 50 million are required to file a Compliance Certificate from a practicing company secretary.

Yearly Forms by Directors

The directors are required to inform the company about their directorship in other companies every year.

Maintenance of Statutory Register & Minutes Book

A number of registers are required to be maintained, such as‐ Register of Member, Register of Directors, Register of Contracts, Register of Charges, etc. The registers are required to be kept at the registered office of the company.

EVENT BASED COMPLIANCES

These are triggered based on happening of certain events. Examples are:

Receipt of share application money
Allotment of shares
Transfer of shares
Appointment/Resignation of directors
Appointment of Managing Director/ Whole Time Director
Executing agreement with related parties
Change in the Bank signatories
Change in the statutory auditors

There is paperwork that needs to be done for the above and there are various deadlines for these tasks. In case, of noncompliance or even a missed deadline there can be penalties, additional fees or a compounding of offence, etc. Hence, it is necessary that the happening of such events be tracked and compliances met with on time.

Cost of Non‐compliance:

The Companies Act, 1956 provides for penalty/fine or imprisonment either of the officer in default and/or the company. The Managing Director, Executive Director are the “officer in default”. If there is no executive director, all the directors are treated as “officer in default”. For the procedural lapses such as late filing of forms, additional filing fees are required to be paid. In case of FEMA, the penalty for noncompliance can go up to thrice the amount involved. Private Limited Companies in general have more compliance requirements than LLP’s.

Conclusion:

Clearly, then, running a business especially in the form of a private limited company is not something to be undertaken lightly, and requires both an ongoing investment of much time and effort, and significant knowledge of many financial and regulatory technicalities. Luckily, there are established and competent professionals in the market today ready and willing to help you at every stage of the business cycle, not only in incorporation but with all the compliance and regulatory requirements through the long life of your organization. For such help from the very best regarding your Private Limited Company compliance needs and necessities, contact IndiaFilings.com today.

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Frequently Asked Questions

Common questions about Private Limited Company Compliances India.

According to the article, a private limited company is required to hold at least four board meetings in a year, with at least one meeting being held every quarter. The presence of directors is mandatory, and the quorum is either one-third or two directors, whichever is greater. The meetings must be properly recorded, and the signed minutes must be maintained at the registered office.

The article states that an Annual General Meeting (AGM) is a shareholders' meeting that a private limited company must hold every year. Its primary agenda includes the approval of financial statements, declaration of dividends, and the appointment of auditors. The AGM must be held in the city where the company's registered office is situated.

A private limited company is required to file several annual forms apart from the annual financial statements. These forms contain detailed information about shareholdings, directors, financials, and more. All these forms must be certified by a practicing Chartered Accountant or Company Secretary. Additionally, companies with a paid-up share capital between INR 1 million and 50 million must file a Compliance Certificate from a practicing company secretary.

The article mentions that directors of a private limited company are required to inform the company about their directorships in other companies every year. This information must be provided to the company on an annual basis.

According to the article, a private limited company is required to maintain several statutory registers and minute books, such as the Register of Members, Register of Directors, Register of Contracts, Register of Charges, and others. These registers must be kept at the company's registered office.

The article lists several event-based compliances that a private limited company must adhere to, such as the receipt of share application money, allotment of shares, transfer of shares, appointment or resignation of directors, appointment of Managing Director or Whole-Time Director, executing agreements with related parties, changes in bank signatories, and changes in statutory auditors. These events trigger specific compliance requirements and paperwork that must be completed within specified deadlines.

The article mentions that the Companies Act, 1956 imposes penalties, fines, or imprisonment for non-compliance, either on the officer in default (such as the Managing Director or Executive Director) or on the company itself. In case of procedural lapses, like late filing of forms, additional filing fees must be paid. Under FEMA (Foreign Exchange Management Act), the penalty for non-compliance can be up to three times the amount involved.

According to the article, private limited companies generally have more compliance requirements than Limited Liability Partnerships (LLPs). This implies that running a private limited company involves more legal and regulatory obligations compared to an LLP.

The article suggests that running a business, especially in the form of a private limited company, requires significant time, effort, and knowledge of financial and regulatory technicalities. It recommends seeking help from established and competent professionals who can assist with incorporation, compliance, and regulatory requirements throughout the life of the organization.

The article specifically mentions IndiaFilings.com as a recommended service provider for private limited companies seeking assistance with compliance needs and necessities. It states that IndiaFilings.com offers help from the best professionals regarding Private Limited Company compliance requirements.