Compliances for Private Limited Company

Mandatory Annual Compliances for Companies

 

What is Mandatory Annual Company Compliance?

There is a set of ROC compliance under the Companies Act 2013 that are required to be completed annually. These are the mandatory annual compliances for private limited company as failure to fulfil such compliances would attract the levy of penalties in the form of fine or imprisonment or both. For Example – Maintenance of Annual returns, Financial Statements etc.

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What are the Mandatory Annual Company Compliances?

Board Meetings – Section 173 & Secretarial Standard 1

The first and foremost mandatory annual compliances for private limited company prescribed by the Companies Act, 2013 is Board Meetings. According to the Section 173 of Companies Act, 2013,

  • there shall be minimum 4 Board Meetings conducted in every financial year
  • there must not be a gap of more than 120 days between 2 consecutive Board Meetings

✔ Quorum –

The prescribed quorum for Board Meeting shall be 1/3rd of the total number of directors or at least 2 directors, whichever is higher.

Note – directors may present in the meeting either in person or through video conferencing or through other audio-visual means for the purpose of quorum.

✔ In case of Small Companies –

Only 2 minimum Board Meetings are prescribed in one financial year.

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Annual General Meetings – Section 96

The second ROC Compliance is Annual General meeting. Annual General meetings are basically the general meetings of the company whereby the ordinary business such as dividend declaration, auditor’s appointment etc. is discussed.

Section 96 of the Companies Act,2013 mandates for every company (except One Person Company) to hold a general meeting called as Annual General Meeting to discuss and make decisions on the pre-decided business matters.

  • Gap – Not more than 15 months shall elapse between one AGM and next AGM except for special reasons
  • Place – either at registered office or at some other place within the city, town or village wherein the registered office is situated subjected to the proviso of Section 96
  • Time – during business hours (between 9 a.m. and 6 p.m.)
  • Day – any day except for national holiday
  • Prior Notice21 days prior notice is required to be given to all the members
  • Quorum – Minimum members to be presented in the meeting –

Private company –

  • Minimum 2 members

Public Company –

  • When total no. of members is either 1000 or less than 1000 then minimum 5 members
  • If the total number of members is more than 1000 and within 5000 then minimum 15 members
  • Where the  total number of members is more than 5000 then 30 members

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Annual Return (MGT 7) – Section 92

The next company filing is Annual Return. Annual return means the return is to be filed annually in Form MGT-7 with ROC. The company has to file such return within 60 days from the date of AGM. Annual Returns manifest the financial information of the company as on 31st March to the shareholders, directors, Key managerial personnel and other stakeholders etc.

Moreover, if a company has a paid-up share capital of Rs. 10 Crore or more or whose turnover is Rs. 50 crore or more then Annual Return shall be certified by Company Secretary in practice and thereafter, this certificate will also be filed in Form MGT-8.

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Financial Statements (AOC 4) – Section 126

Thereafter, Section 126 of the Companies Act, 2013 mandates every company to prepare financial statements of the company for a financial year. It shall include Profit and loss statement, Cash flow Statement, Balance Sheet and statement of change in equity.

Along with the preparation, it is also mandatory for each company to file such Financial Statements in Form AOC-4 with ROC within 30 days from the date of Annual General Meeting.

Penalty for Delay –

In case a company fails to file Form AOC-4 within prescribed time then it shall be liable to penalty of Rs. 100 per day till the date of filing such form.

Appointment of Subsequent Auditors (ADT-1) – Section 139

In addition, Every company is required to appoint auditors who is a registered Chartered Accountant to inspect and examine the financial statements of the company and to state correct and true financial position to the shareholders, directors and KMP.

Therefore, according to Section 139 of Companies Act, 2013, every company has to appoint a subsequent auditor in its AGM. Such Auditor shall hold the office from the conclusion of such AGM till the conclusion of 6th AGM.

Next point to learn here is that the company is mandatorily required to file Form ADT-1 with ROC within 15 days from the date of such appointment.

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Auditor’s Report (ADT-4) – Section 143

Next mandatory annual compliance is that the auditor of the company has to present the Auditor’s Report at the end of the financial year. Auditor shall express his opinion and interpretation on the correctness and financial stability of the company.

In addition to this, Auditor is empowered under Section 143 of the Companies Act, 2013 that if he has sufficient reasons to believe that any officer or employee of the company has committed an offence of fraud of minimum Rs. 10 million against the company then he can report the same directly to the Central Government by filing ADT-4 Form.

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Form DPT-3

In addition to above all, the Ministry of Corporate Affairs introduced mandatory annual compliance for all the companies excluding Government to file DPT-3 Form. A company has filed such form when it has outstanding loans not treated as deposits at the end of the financial year. This is why, this form is also referred as one-time return form.

Note: – DPT-3 Form can be filed up to 31st December 2020 for the financial year 2019-2020.

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Maintenance of Statutory Registers

All the companies are required to maintain certain statutory registers prescribed under the Companies Act, 2013 or under any other law. Such registers basically include the specific record of the company’s vital information like shareholders, directors, loans, deposits etc. and these are kept at the registered office of the company.

Following are the important statutory registers –

REGISTERS Legal Provision (Companies Act, 2013)  Form
1.    Register of Members Section 88(1) MGT-1
2.    Register of Debenture holders Section 88(1) MGT-2
3.    Index of Members and Debenture-holders Section 88(2)
4.    Register & Index of Beneficial owners Section 88(3)
5.    Foreign register of members, Debenture Holders other security holders or beneficiary residing outside India Section 88(4) MGT-3
6.    Register of Sweat equity shares Section 54 FORM SH-3
7.    Register of Employee stock option Section 62 FORM SH-6
8.    Register of Renewed & Duplicate Share Certificates Section 46(3) FORM SH-2
9.    Registers of Loans and Guarantee Section 186 MBP-2
10. Registers of Deposits Section 73
11. Registers of Charges Section 85 CHG-7

 

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Secretarial Audit Report (MR-3) – Sections 204 & 205

According to Section 204 of the Companies Act, 2013, all the companies mentioned therein is required to appoint a Company Secretary for performing Secretarial audit. After such appointment, the company shall file the MGT-14 form with the ROC to inform about such appointment.

Thereafter, Section 205 states that the company shall require such Company Secretary to perform Secretarial audit and to report thereon called as Secretarial Audit Report by filing MR-3 Form. Such Secretarial Audit Report will be a part of directors’ report.

These provisions are applicable on following Companies –

  1. Listed Companies
  2. Public Companies –
    • Paid-up Share Capital of Rs. 50 Crore or more, or
    • Turnover of Rs. 250 Crore or more

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Director’s Report – Section 134

Section 134 of the Companies Act, 2013, states that the Directors of the company shall prepare a report (known as directors’ report) and then it should be presented to the shareholders.

  • It is a part of Annual Report
  • Director’s Report basically states the financial position and business operations of the company
  • This report shall be signed by the Chairperson authorized by the Board of Directors.

Director’s Report is filed by filing FORM MGT-14 within 30 days from the date of passing resolution for approving the Board Report. The best way to fulfill annual filing of company is to appoint professions.

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Books of Accounts – Section 128

The next company annual filing is to maintain books of accounts. All the companies are also compulsorily required to prepare and maintain proper and accurate books of accounts for a financial year under section 128 of the Companies Act, 2013.

These Books of accounts shall show the true and fair view of the state of affairs of the company and this is why double entry system shall be observed while preparing them. Moreover, all the accounting shall be based on an accrual basis.

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Corporate Social Responsibility – Section 135

Section 135 and Schedule VII of the Companies Act, 2013 along with Corporate Social Responsibility Rules, 2014 mandates for mentioned companies to comply with Corporate Social Responsibility (CSR).

According to CSR, following companies are required to make contributions to Philanthropic Activities –

After that, All companies (Including their holding or subsidiary companies)

  • Whose net worth is either Rs. 500 Crore or more, or
  • when their Turnover is Rs. 1000 Crore or more, or
  • if their Net-Profit is Rs. 5 Crore or more

during the immediately preceding financial year.

Therefore, such companies have to undertake the required CSR activities in a financial year. The best way to fulfill annual filing of company is to appoint professions.

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Cost Auditor (CRA-2) -Section 148(3)

The next company annual filing is to appoint cost auditor. Every company is required to get cost audit by the Cost Auditor as per the Section 148(3) of the Companies Act, 2013. Accordingly, a company has to appoint a Cost Auditor who is in practice and he shall be appointed by the Board of Directors. After appointment, the company is also required to file Form CRA-2 with the Registrar of Companies within 30 days from the date of such appointment.

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Cost Audit Report (CRA-4) – Section 148

The last company annual filing is the Cost Audit Report. As we have already discussed the appointment of Cost Auditor and we know that he is appointed to perform the Cost audit and thus to prepare a Cost Audit Report to disclose economic position of the company. Moreover, Cost Auditor must present the copy of such report to the board who shall file the Cost Audit Report with the Central Government by filing Form CRA-4 within 30 days from the date of receipt of copy of such report by the board.

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List of Annual Company Compliances, Applicable Form and Respective Due Date:

Annual Company Compliances for Private Limited Applicable Form Time Limit Whether to be filed before ROC or Not?
Board Meetings Minimum of 4 Board Meetings to be held every year with not more than 120 days gap within two meetings
Annual General Meetings One Annual General Meeting should be held every year. The gap between 2 Annual general meetings must not be more than 15 months N.A.
Annual Return MGT -7 Within 60 days from the date of AGM N.A.
Financial Statements  AOC-4 Within 30 days from the date of AGM Yes
Appointment of Subsequent Auditors  ADT-1 Within 15 days from the date of appointment of the Auditor Yes
Any Company having outstanding loan/amount as on 31st March of each F.Y. has to furnish details and bifurcation of such outstanding amount.  Form DPT-3 30th June Yes

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Conclusion

However, these Company Compliances for Private Limited are technical in nature this is why only a person who is well versed with such requirements and provision can fulfill them. Thus, it becomes a tough task for all the companies to obey Compliances for Private Limited timely. So, it is always suggested to take assistance from experts’ team for company annual filing and the cost of annual compliance for private limited company is also nominal. If you are also looking for a Professionals’ team who can observe such compliances timely on your behalf without levy of any fine or penalty then Manthan Experts is the right platform.

You can contact us for immediate assistance in one click.

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Knowledge Source:

Company Compliances
Post Incorporation Company Compliances
Event-Based Company Compliances

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