Compliances for a Private Limited Company: A Complete Checklist

Once your Company is Incorporated, there are different compliances like the appointment of the auditor, income tax filing, board meetings, annual general meetings that are required to be fulfilled every year. These are the necessary legal formalities for every owner of a private limited company.

What are Compliances for a Company?

Compliance refers to ‘action to complying with the law’. There are certain legal formalities that one needs to fulfil after the incorporation of a Private Limited Company. It means that the company is obeying all the laws and regulations to manage the business operations.

Some of the formalities are to be fulfilled every year so You might need to undergo some legal penalties in case you fail to complete any of the company compliances.

The Compliances can be categorised into two categories –

  • Compliances with Registrar of Companies (ROC)  
  • Other Compliances

Annual Compliances with ROC

These Compliances are to be done after the Incorporation of the Company. Below are the Statutory Compliances for a Private Limited Company.

Appointment of the Auditor

An auditor is required to conduct a statutory audit in the company. Appointing an auditor in the company for 5 years is mandatory.

For this, You need to file a form (ADT-1) to appoint the first auditor within 30 days of incorporation of the company. In case you fail to appoint the auditor within the prescribed period then the name of your company might get struck-off by the Company Registrar.

Note: First auditor will be appointed in a Board Meeting after which they can be appointed in the Annual General Meeting.

Director’s Report

A Director’s Report needs to be submitted every year duly signed by the ‘Chairperson’ (to be approved by the Board of Directors). At least two directors can also approve the report in case one of them is a Managing Director and Chief Executive Officer.

According to The Companies Act, 2013, the following MAIN documents need to be attached with the Director's report –

  • Auditor’s report along with every financial statement.
  • Extract of the Annual Return
  • Number of Meetings of the Board
  • Director’s Responsibility Statement

Through this report, the Director of the company gives a written declaration every year in a specific format to disclose about the directorship in the company.  

Note: In case of a One Person Company only one director is required for approval of the report.  

Annual General Meeting (AGM)

This meeting is held every year to enlighten the shareholders about the plans/goals of the company. The shareholders of the company then decide whether to approve/ reject the project by voting mutually.

The meeting can also include discussions about the declaration of dividends, financial statements, appointment and salary of the directors or appointment/re-appointment of auditors.

The meeting is to be conducted within 6 months from the date of closing of the financial year during business hours either in the registered office or a place near it. There cannot be a gap of more than 15 months between two Annual General Meetings (AGM).

Note: You cannot conduct an Annual General Meeting on a public holiday.  

Filing Annual Return

It is mandatory to file Annual Returns of the Company within 60 days of conducting an Annual General Meeting. The Annual Returns are filed with the Registrar of Companies in the prescribed form (MGT-7).

Private Limited Company also requires filing its Profit and Loss Statement along with the Balance Sheet and Director’s Report within 30 days of holding the Annual General Meeting (AGM) in the form AOC-4.

The Annual Returns include details of the shareholders and directors. The financial year to file the returns is 1st April to 31st March.

These forms need to be signed digitally by any one of the Directors and certified by a practising Company Secretary.  Also, an additional form (MGT-8) needs to be submitted in case the paid-up share capital of a company is more than Rs. 10 Crores or an annual turnover of Rs. 50 Crores.  

Account Audits

It is mandatory for every Company to prepare all the financial accounts and get them audited from a professional Chartered Accountant at the end of every financial year. The auditor will review all the bank accounts, balances, financial transactions and bookkeeping records.

The purpose of the Audit is to know whether the company is providing true statistics for all its balances or not. The appointed auditor will provide an Audit Report and Financial Statements (audited) which needs be filed with the Registrar of Companies.

Board Meetings

Every business requires conducting at least 4 Board Meetings in a year. In case of a Private Limited Company, the number is reduced to 2, i.e. One Board Meeting in 6 months. The first meeting of the Board of Directors in a Private Limited Company must be conducted within 30 days from the Incorporation date.

A minimum of 2 directors or 1/3 of the total number of Directors needs to be present at every Board meeting.  It is mandatory to maintain minutes of the meeting (things discussed in the Board/General Meeting) within 30 days of the conclusion of that meeting.

The same needs to be maintained in the Registered Office of the Company which will act as a proof in case of any dispute. The Directors of the Company must be informed about the meeting at least 7 days in advance.  

Statutory Registers and Records

As per the Companies Law, 2013, there are various registers and records that a registered Private Limited Company needs to maintain. Such records are kept at the registered company office, and any business member can inspect its details during the business hours.

The records include Register of Members, Register of Shares, Register of Directors, Incorporation documents of the company, Resolution of the meetings of Board of Directors, Annual General Meeting, Minutes of the Board Meetings.  

Note: The Registers and Records of past 8 financial years must be maintained in proper order.

Income Tax Compliances

This is one of the most important compliances and requires that the Company owner must have proper knowledge of all the formalities and taxes that are to be paid every year.

Every Company needs to file Income Tax Return, Tax Audit Report, Periodic Returns like Goods and Service Tax (GST), Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).

The Tax Audit Report is also filed with the Registrar of Companies. (Mandatory in case of companies with a gross receipt/turnover of more than Rs. 1 Crore). GST Return can be filled only by the Companies having a registered GSTIN.  

Note: The Income TAX is payable at a rate of 30% along with Education Cess while GST is paid at a rate of 10%.  

Other Compliances

Several other event-based compliances are required to be fulfilled as and when the case be. These compliances are different from the ones done with the Registrar of Companies.

  • Change in Authorised/Paid-up Capital of the Company.
  • Giving Loans to other companies.
  • Loans to Directors.
  • Allotment of shares or Transfer of new shares.
  • Opening/Closing of bank accounts or change in Signatories of Bank Account.
  • Appointment/Change of the Statutory Auditors of the Company.
  • Appointment of Managing/Whole-time Director and payment of salary.  

What if You Miss any Compliance?

If a Company fails to comply with any of the Annual Compliance then, the per-day penalty is levied on the respective Company. You would require paying additional fees in case there is a delay in filing any form. This fine keeps on increasing with the delay in time.

For example – A penalty of Rs. 6300 plus Rs. 100 (per day) is imposed on the delayed filing of form AOC-4 and Rs. 3100 plus Rs. 100 (per day) on form MGT-7. 

Note: Remember the cost of non-compliance for a Company is always costlier than the incorporation cost. 

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