Written by : DG Gupta

A financial professional, qualified Chartered Accountants and Company Secretary examinations and enriched with experience of all types of accounting, taxation and compliance of Manufacturing as well as Service Industries

Compliances To Be Followed By Private Limited Company

DG Gupta
DG Gupta, CA, CS

Jul 6, 2021 04:34

The most popular way to start a business is to set up a Private Limited Company. However, while operating a private limited company, there are various compliances one requires to follow necessarily. Compliance with all the terms and regulations in effect at any point in time is of paramount importance because non-compliance can result in stringent actions against the company and its owner. Any company in India needs to meet the regulatory conditions laid down in the Companies Act, 2013.

All private companies must maintain annual compliance just like they must file an income tax return each year. The compliances which are to be met mandatorily by a private limited company registered in India are listed below-

* Filing forms and returns with the RoC Annually-

All the shareholders and directors details shall be disclosed to the company's registrar by filing annual returns and disclosures relating to them. As a part of the annual returns following forms are also filed with RoC –

1. Form MGT – 7: Annual return – It shall mandatorily be filed within 60 days of the annual general meeting gets held.
2. Form AOC- 4: Financial Statement- Fill this form is supposed to within 30 days along with a balance sheet and statement of profit and loss account and Directors Report.

* Filing Income Tax Return-

All private limited companies have to file their income tax return on or before the last filing date, as prescribed by the Income Tax Department or CBDT. Complying with all the instructions and requirements communicated by the Income Tax Department is also extremely relevant for the smooth functioning of the company. The policies and return requirements often change, and it is empirical to stay updated with every change to prevent defaulting and delay the procedure.

* Commencing business within 180 days –

Companies that have got registered in India after November 2019 must receive a commencement of business certificate before starting any business dealings or commercial transactions. Within 180 days, the company has to obtain the commencement of business certificate. In case of non-adherence in this regard, the company pays a heavy penalty, which is estimated to be Rs. 50,000 for the corporate entity in default and Rs. 1000 per day for the defaulting directors.

* Appointing an Auditor within 30 days –

Each private limited company has to appoint a statutory auditor in India within 30 days of incorporation. If there is a failure to do so, the company would not be allowed to commence their business dealings and transactions. There shall be a fine of Rs. 300 for every month of default.

* Company Name Board And Letter Head of Company –

Every company must get the company's name, address of all the official branches painted and affixed at the entrance of every office building at the locations of their branches, in legible form. It should also have its name, address, CIN, telephone number, and email id printed on every billhead, business letter, letter paper, notice and other official publications. A private limited company should also provide information regarding the company to all the clients and customers who want to get in touch with the company.

* Transfer of shares -

It is crucial to report any transfer of shares of the private limited company. Pass the approval for the same with a Board resolution.

* Report from Practicing Company Secretary – Form MGT-8 –

A certificate by the Company Secretary in practice is required for private companies having a turnover of Rs. 50 crores or more or paid-up share capital of at least Rs. 10 crores.

* Appointment/Resignation/Change in Designation of director–Form DIR-12 -

Aptly report any changes in the post of a director, like an appointment or removal. One has to file the information with Form DIR-12 within 30 days of such change.

* Regularization of Additional Director -

To be appointed as director of the company, the additional director needs have to get regularized as director by passing a shareholder resolution in the General Meeting.

* First Board Meeting -

A notice for the board meeting must be sent to every director 7 days before the meeting at least. Hold the First Board meeting of a company should in the first 30 days from incorporation.

* Subsequent Board Meetings -

The time lag between two consecutive Board meetings should not exceed 120 days, and a minimum of 4 meeting sessions per year is a must, except in the case of a small company, in which 2 board meetings is sufficient.

* Minutes of Meeting -

The minutes of every general meeting needs to be recorded and entered into the minute's book during the particular date of the meeting. Plan the minutes of creditors, board and committee meetings in a way that they get held within 30 days of the last meeting. Mention all the important decisions and appointments at the meeting need in the minutes of that particular meeting.

Event-Based Compliances

The happening of various events drives Event-based compliances. For every particular event, certain tasks and paperwork need to be done within a pre-fixed deadline. There can be penalties, compounding of offence, additional fees in case of non-compliance or even a missed deadline. Hence, the tracking of events and the necessary compliances to be met on time becomes essential.

The events which require such compliances comprise

  • Alteration in the name of the private limited company
  • Enhancement in the authorized or paid-up share capital
  • Conversion of the private limited company
  • Shifting of the registered office of the company
  • On dividend declaration
  • Changes in the remuneration of Whole Time Director or Managing Director

Other relevant compliances

* MSME Rules

MSME Form 1 is a half-yearly form that has to be filed before 31st October and 30th April every year by specified companies. The following companies and details have to be provided therein:-

All the companies failing to pay the micro and small enterprises for the goods and services supplied within 45 days of acceptance or deemed acceptance of goods or services have to file a half-yearly return to the MCA.

The details to be mentioned in the form are:-

a) The reasons for the delay, and
b) The amount of payment due

* Deposit Rules

Other than government companies, every company has to file DPT-3 annually for Deposits, transaction particulars not under Deposits or both. DPT-3 has to be filed by 30th June each year and furnish information as
on 31st March of the respective financial year duly audited by an auditor.

Gotaxfile is here to lend a helping hand for your private limited company's compliance needs!

Running a business, especially a private limited company, is no cakewalk. It requires constant investment of effort, time and money and significant knowledge of regulatory rules, acts and technicalities.

Thorough compliance is often seen as a business asset. It can bring customer trust, competitive advantage and eventually, improved profitability and growth. While running a private limited business, the key is to remember that the cost of non-compliance is always more than the cost of compliance.

GoTaxfile is here with its solid acumen to offer solid backing in addressing the needs of your private limited company. From the incorporation to the annual compliances, we stand with you every step of the way. Contact us now!

DG Gupta
DG Gupta, CA, CS

Jul 6, 2021 04:34

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