Navigating compliance can be a complex challenge for private limited companies in India. Adhering to the comprehensive requirements of the Companies Act 2013, including director appointments, shareholder meetings, and other regulatory obligations, is crucial but can often seem overwhelming.

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Compliance for Private Limited Company

Compliance refers to adhering to orders, rules, or requests. For a private limited company incorporated in India, Compliance with the Companies Act 2013, which includes obligations to the Registrar of Companies (RoC), is essential for private limited companies in India. This legislation governs various aspects, including the appointment, qualification, remuneration, and retirement of directors and the conduct of board and shareholder meetings. Compliance with Registrar of Companies (RoC) regulations is mandatory for every private limited company, regardless of turnover or capital amount.

• Compliance Related to the Registrar – ROC Complaince
• Compliance Beyond the Registrar’s Purview – Non-Registrar compliance

ROC Compliance for Private Limited Company

As mentioned above, These are obligations that a company must fulfil in accordance with the regulations set by the Registrar of Companies (ROC) or equivalent authority. They typically involve statutory filings and adherence to the Companies Act provisions.

Ensuring adherence to ROC compliance is pivotal for companies operating in India. ROC Compliance for Private limited company can be broadly classified into:

• Annual Compliance: These are the regular, yearly filings and disclosures companies must make, including submitting annual returns and financial statements.
• Event-Based Compliance: These are specific compliances that need to be addressed as and when certain events occur within the company, such as changes in the company’s management, share capital, or registered office.
• Other Compliances: This category includes a range of other regulatory obligations that might not fall strictly under annual or event-based categories but are essential for maintaining the company’s legal status, such as director KYC updates and maintenance of statutory registers.

Annual Compliances for Private Limited Company

Annual compliances are a critical aspect of corporate governance for companies registered in India. Key annual compliances include:

INC-20A: Declaration for Commencement of Business

For companies registered in India post-November 2019 with a share capital, securing a Commencement of Business Certificate is a prerequisite before initiating any business activities or exercising borrowing powers. This certificate must be acquired within 180 days of incorporation by filing Form INC-20A.

Failure to obtain this certificate results in penalties, with the company facing a fine of Rs. 50,000 and directors being charged Rs. 1,000 per day for each non-compliance, underscoring the importance of promptly adhering to this regulatory requirement.

Appointment of Auditor and Filing E-form ADT-1

The first auditor must be appointed within 30 days of incorporation and ratified by the shareholders during the first Annual General Meeting (AGM). Following the AGM, Form ADT-1 confirming the auditor’s appointment must be filed with the Registrar of Companies (ROC) within 15 days.

Board Meetings

The first board meeting should be held within 30 days of incorporation. Subsequently, companies must hold at least four board meetings every year, ensuring that the interval between two meetings is at most 120 days.

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

A notice should be given seven days in advance about the meeting’s date and purpose.

Annual General Meeting (AGM)

The first AGM should be conducted within nine months from the closure of the first financial year. For subsequent years, the AGM must be held every year within six months from the end of the financial year, ensuring that the gap between two AGMs is at most 15 months.

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 company’s registration or the city, village, or town in which the registered office is situated.

Annual ROC Filings

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

As a part of the annual compliance for private limited company, the following forms are to be filed with the ROC:

AOC-4: Filing of Financial Statements

This form is for filing the company’s financial statements and must be submitted within 30 days following the Annual General Meeting (AGM).

MGT-7 – Annual Returns

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

DIR-12: Appointment/Resignation of Directors

This form pertains to changes in the company’s directorship, including appointments and resignations, and must be filed within 30 days of such changes.

DIR-3 KYC: Director KYC Submission

Directors are required to submit their KYC details through Form DIR-3 by September 30th each year, provided their Director Identification Number (DIN) was allotted by March 31st of that year and the status is ‘Approved’. Failure to file DIN eKYC results in a penalty of Rs. 5000.

DPT-3: Return of Deposits

Companies must use this form to report details of deposits and other non-deposit receipts annually by June 30th.

Directors’ Report

An abridged version covering all required information for small companies under Section 134 must be prepared. It should be authorized by the Chairperson or at least two directors.

Maintenance of Statutory Registers and Books of Accounts

Companies must maintain and regularly update various statutory registers and records, including minutes of board meetings and AGMs, books of accounts, financial statements, and files with the ROC.

Circulation of Financial Statements and Other Relevant Documents

Companies must send approved financial statements, along with the Directors’ and Auditors’ reports, to all members at least 21 clear days before the AGM.

For ready reference, below is a table summarizing the annual compliances for private limited company and their respective due dates:

Event-Based Compliances for Private Limited Company

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-Registrar compliance

These regulatory obligations do not directly involve the ROC but are essential for lawful business operations. They may be governed by various other regulatory bodies and laws, depending on the nature of the business, its size, and the industry it operates in. These include:

• Payment of Periodic Tax Due: Regular payment of Goods and Services Tax (GST) liability, Tax Deducted at Source (TDS), Tax Collected at Source (TCS), Advance Tax, and Professional Tax (PTax).
• Filing of Periodic Returns:

• Monthly/Quarterly/Annual GST Returns
• Quarterly TDS Returns
• Filing of Income Tax Returns
• Filing of Tax Audit Report
• Filing of half-yearly Employees’ State Insurance Corporation (ESIC) returns
• Filing of Provident Fund (PF) returns
• Filing of professional tax (PTax) returns

• Regulatory Assessment and Reporting: Compliance with various regulatory assessments and reporting requirements under different acts of law, such as the Environment Protection Act, Competition Act, and Factory Act.

Non-compliance Penalty

Non-compliance with the rules and regulations of the Companies Act in India can result in penalties for the company and its defaulting members. Penalties typically involve fines imposed for the duration of the non-compliance. Additionally, delays in annual filings may incur additional fees. Therefore, companies should fulfil their compliance obligations promptly to avoid penalties and financial repercussions.