Annual Compliance for Pvt Ltd Company
Annual Compliance of Pvt Ltd Company - An Overview
With the introduction of the Companies Act, 2013 in India, the compliance requirements for all types of companies, including Public Limited Companies, Private Companies, LLPs, and OPCs, have significantly increased. To ensure transparency in reporting, SEBI and MCA regularly issue new amendments through notifications and circulars. Companies must meet all compliance requirements by the specified deadlines to avoid hefty penalties. Keeping track of the relevant compliances as per the Companies Act or SEBI regulations can be challenging. CRSB offers assistance with all annual filings and provides details on company compliance.
Benefits of Pvt Ltd Company Compliances in India
Here are some important benefits of Private Limited Company compliance in India:
1. Attracting Investors: Investors focus on financial records and compliance when considering an investment. They check if annual returns are regularly filed on the MCA portal. Therefore, keeping up with Private Limited Company compliance is essential for attracting investors.
2. Maintaining Active Status: Timely filing of annual compliance is crucial to avoid penalties. If a company fails to file, it may lose its active status, be marked as “in-operational,” and be removed from the ROC. Directors of such companies are banned from future business activities in India.
3. Boosting Credibility: The date of filing compliance is displayed on the MCA portal. Regular compliance filing enhances business credibility, making it easier to attract customers, win government tenders, and secure loan approvals.
4. Financial Assistance: A business’s financial department must meet various standards for taxes and accounting. Failure to meet these standards can lead to financial losses and legal problems.
Mandatory Pvt Ltd Company Compliances
Here are the mandatory compliance requirements for Private Limited Companies:
Appointment of First Auditor: The Board of Directors (BoDs) must appoint an auditor within 30 days of incorporating the company. If a company fails to appoint an auditor, it must pay a penalty and cannot start its business. The auditor remains in office until the first Annual General Meeting (AGM).
Subsequent Auditor: This auditor ensures the company’s financial dealings are fair. Appointed at the first AGM, they serve until the sixth AGM. According to the Companies Act, 2013, a Subsequent Auditor is appointed by filing Form ADT-1.
AGM (Annual General Meeting): The AGM is a crucial annual compliance requirement. The Board of Directors presents the company’s financial position to shareholders. The AGM must be held by September 30th of each financial year during working hours, not on public holidays, and after giving at least 21 days’ notice.
Board Meeting: The first Board Meeting must be held within 30 days of incorporation. Four Board Meetings are required each financial year, with no more than 120 days between consecutive meetings. Directors must be notified at least 7 days before the meeting.
Director Disclosure: Every year at the first Board Meeting, all Private Limited Companies must file Form MBP-1, disclosing directors’ interests in other entities.
Filing of Financial Statements: Companies must file their financial statements, including the Profit & Loss Account and Balance Sheet, along with the Director’s Report, by submitting Form AOC-4 within 30 days of the AGM.
Annual Returns Filing: Companies must file their Annual Returns within 60 days of the AGM by submitting MCA Form MGT-7. Late filing results in penalties.
Director KYC: Directors with an active Director Identification Number (DIN) must file DIR-3 KYC annually. Failure to do so will deactivate the DIN, preventing the filing of any compliance forms.
Form DIR-8: Every Director must file this form during their appointment, confirming they are not disqualified from serving as a Director.
Commencement of Business Certificate: Every company must obtain this certificate within 180 days of incorporation. Failure to do so results in penalties.
Other Annual Compliances of Pvt Ltd Company
Here are some other important annual compliance requirements for Private Limited Companies in India:
- GST Returns: File monthly, quarterly, and annual GST returns.
- TDS Returns: File periodic TDS (Tax Deducted at Source) returns.
- Tax Liability Calculation: Calculate tax liability in advance.
- Income Tax Returns: File income tax returns.
- Tax Audit Report: Submit the tax audit report.
- Semi-Annual Easy Returns: File semi-annual easy returns.
- PF Returns: Submit Provident Fund (PF) returns.
- Professional Tax Returns: File professional tax returns.
- Regulation Compliance: Evaluate and report compliance with various laws (e.g., Environment and Protection Act, Competition Act, Factory Act, etc.).
FAQ's
Annual compliance means the legal tasks and filings that a private limited company must complete every year.
Key components include filing annual financial statements, annual returns, and conducting an annual general meeting (AGM).
The AGM should be held within six months from the end of the financial year.
The annual financial statements must be filed within 30 days of the AGM.
The annual return must be filed within 60 days from the AGM.
Yes, but an extension requires approval from the Registrar of Companies (RoC).
Yes, late filing incurs penalties that increase with the length of the delay.
The board of directors and company secretary are responsible for ensuring annual compliance.
Yes, it is mandatory for every private limited company to appoint an auditor.
The annual financial statements should encompass balance sheets, profit and loss accounts, and cash flow statements.
Yes, a private limited company is required to have a company secretary.
Non-compliance can result in fines, penalties, and even the striking off of the company from the register.