What Are Mandatory Compliance Required For Private Limited Companies?

A private limited company is the most popular form of business entity. Private limited companies in India are governed by the Companies Act under the Ministry of Corporate Affairs (MCA). According to MCA, every private limited company is bound to fulfil the mandatory secretarial compliance filings or ROC compliance within the fixed due date to avoid penalties and prosecution.

MANDATORY ROC COMPLIANCES FOR PRIVATE LIMITED COMPANY:

1.BOARD MEETING:

First Board Meeting of Private Limited Company is required to be held within 30 days of its incorporation. The notice of Board Meeting refers to a document that is sent to all directors of the company. The Notice of Board Meeting and the Agenda of Board Meeting to be prepared and issued to every director at their registered address at least 7 days before the date of Meeting. Some particulars of agendas are constant and some may vary according to the requirement of corporate.

PROVISIONS OF THE FIRST BOARD MEETING AND SUBSEQUENT MEETINGS:

  • The First Meeting of Board of Directors to be conducted within 30 days from the date of Incorporation of the company.
  • The meeting may be conducted at any time that is fixed by the Board and the place of the meeting would be at registered offices or any other place in or outside India.
  • At least 1 meeting of Board of directors in each half of the calendar year
  • Minimum Gap between two meetings at least 90 days.
  • Quorum1/3RD  of the total strength of the board or 2 Directors, whichever is higher is subjected to the articles of association and subject to the conditions that the quorum must be present throughout the meeting.

2. ANNUAL GENERAL MEETING (AGM):

One AGM should be held every year and a gap of 15 months should exist between two AGMs. The purpose is to discuss financial statement, appointment of auditor, declaration of dividend, remuneration, etc. The very First Annual General Meeting should be held within a period of nine (9) months from the end of first Financial Year after its incorporation.  Annual General Meeting can be called by giving a 21 days’ notice to the members. AGMs can also be convened at a shorter notice.

DISCLOSURE OF DIRECTOR:

Every director shall at the first meeting of the Board in which he participates as a director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the disclosures already made, then at the first Board meeting held after such change, disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed.

3. APPOINTMENT OF THE AUDITOR (FORM ADT-1):

Companies must appoint their First Auditor within 30 days of incorporation. The First Auditor will be appointed for five years and the appointment must be filed using Form ADT-1. When an auditor is appointed by the company then within 15 days from the date of the Annual General Meeting, form ADT-1 is to filed with the registrar of the company

4. FILING OF FORM ANNUAL RETURNS (FORM MGT-7 AND AOC-4) :

Every company is required to get its accounts audited by an auditor and file its Income Tax return with the Income tax department for every financial year. The company is also required to file its audited financials and Director’s report with the ROC in Form AOC-4 within 30 days of its Annual General Meeting. Whereas, the company has to file its Annual return in form MGT-7 within 60 days of its Annual General Meeting.

5.FILING OF FINANCIAL STATEMENT (FORM AOC-4):

This is a mode of communication between the shareholders and the Board of Directors to inform them about their investment and make disclosure of all the financial transactions done. It is to be done within 30 days from the date of the Annual General Meeting. Particulars about the auditor and board meeting should be filed. 

It should include the following:

  • Details of the particulars on the Balance sheet. Balance sheet should be disclosed
  • Details of the Profit and Loss account
  • Details of the Corporate Social Responsibility
  • All the Related Party Transactions that the company have entered into
  • The audit report and any other miscellaneous transaction (directors report and secretarial audit)

6. FILING OF DIRECTOR’S IDENTIFICATION NUMBER (DIN) KYC:

Every person who has been allotted a DIN is required to file form DIR-3 KYC with the ROC for submitting his/her KYC details for every Financial Year. A failure to file form DIR-3 KYC will result into deactivation of DIN and a penalty of Rs 5,000/- upon late filing.

7. CERTIFICATE OF COMMENCEMENT OF BUSINESS:

This is a one-time mandatory compliance for all the companies incorporated after November 2018 to file form INC-20A for the Certificate of Commencement of Business within 180 days of incorporation of the company.

8.EVENT BASED ROC COMPLIANCES:

SR.NO NATURE OF COMPLIANCES SECTION E- FORM
1. CHANGE IN DIRECTOR Section 149 DIR-12
2. Change in authorised share capital  Section 61 and 64 SH-7.
3. RETURN OF ALLOTMENT SECTION 62 MGT 14, PAS-3
4. APPOINTMENT OF STATUTARY AUDITOR SECTION-139 ADT-1
5. RESIGNATION OF STATUTARY AUDITOR SECTION 140 ADT-3

WHY SHOULD A PRIVATE LIMITED COMPANY FILE ROC COMPLIANCE?

For any default in ROC compliance, the company and the officers responsible for such non-compliance shall be penalized for the period of default. Fine imposed will be on a daily basis and will be imposed for the period for which default continues. Further, in case of delay filing . 

To maintain shareholders and public trust, bring the company to a competitive advantage, to get regular returns on the investment made Private limited Company also known as small company or any other company should follow their mandatory RoC compliance. Compliance act as an asset for the business and to avoid confusion company is required to maintain a register to fill in all the statutory change.

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Swapnil S

CA in Mumbai

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