As we all know there are certain mandatory compliances which a private limited company needs to abide by in order to function smoothly. This write up seeks to answer all the queries which you might have with regard to annual compliance filing for a private limited company.
Ever since the companies act, 2013 came into being, there have been some changes in the guidelines for the private limited companies but majority of the compliances continue to be what they were under the previous law companies act, 1956.
Companies still need to file:-
- Notice of the AGM
- Director's report
- Auditor's report
- Balance Sheet
For starters Annual compliances, broadly, is a two time process. When the process commences, there are certain steps to be followed like the appointment of the auditor, preparation of share certificates, preparing statutory certificates. Tap these steps and a company is good to initiate the process. However, it is the second phase of the annual filing that is a bit tricky and requires a certain degree of effort.
Before we move on, it is imperative to note that there are certain compliances that are quarterly in nature and must not be confused with annual compliances. These must be completed after every 90 days to avoid any hiccups.
- Conducting the board meeting
- Notifying regarding the board meeting
- Preparation of the attendance of the board meeting
- Also updating the statutory register if need be
These are some of the compliances that are quarterly. Now let's switch to annual compliance that must be duly completed once a year.
Filing director's disclosure in other interests
As envisaged by the section 184 of the companies act, 2013, a director is required to make a disclosure regarding his interests beyond the company he is chairing. This interest of his must be revealed in the first meeting of the board where he is participating as the director. If there are any changes in his nature of interest, he must inform the board about the same as and when the next meeting is conducted. It is one of the first annual compliances to prepare for filing of any such disclosure by the director.
Filing for the declaration made by the directors
While the previous compliance deals with the subject of a director revealing his interests beyond the company, this talks about his role and interest in the company. The companies act, 2013 clearly states that the director must reveal his interest to the company. Sub clause 1 and 2 of section 184 deal with the subject. Even this declaration is needed to be made available to everyone in the first board meeting.
Preparation of Board's report
After every annual board meeting, a report is prepared with deals with the subject of day to day dealings on the company. It is one of the annual compliances to prepare for filing of that report which is churned after the board meeting. Section 134 Companies Act, 2013 deals with this very subject of drafting the board's report. The report basically contains information like Details of Deposits received and the loans made and the guarantees provided, contracts entered with related parties have to be furnished, et cetera.
Filing the annual return
It goes without saying the drafting a perfect annual return is the most important aspect of annual compliance filing. An annual return consists of following pointers
- Details regarding companies registered offices, principal business, subsidiary and associates.
- Shares, debentures and different shareholding patters of the company.
- Loans on the company
- The members and debenture holders along with the changes that have happened since the last financial year.
- The promoters, directors, key managers and the changes that have occurred since the last financial year.
- Remuneration of important dignitaries
- Penalty or punishment (if any) imposed on the company or its directors or key managers
Obtaining the financial audits
Once the final audit is prepared by the auditor, which is an independent process, it has to be obtained for the purpose of filing the annual return. It's an honest assessment done by someone who does not belong to the company, so keeping a close watch becomes imperative.
Preparation of the details of the board meeting
Before the annual meeting is conducted, it is compulsory to have a board meeting and thus becomes imperative to have all the details of the board meeting in place as the company heads to the annual meeting
Drafting the report of the director
Directors prepare a report after the meeting that deals with all the subjects and minute details regarding the day to day functioning of the company. It is thus a compliance to draft the report filed by the directors of the company.
Preparing the papers for the re-appointment of the auditor
An auditor is the permanent posting in a company. He is an independent functionary, who job is to provide honest and fair assessment of the financial details of the company. And hence he works under certain tenure. As and when that tenure expires, to get his re-appointment papers ready falls under the category of annual compliance.
Preparation for Annual General Meeting
Just like the board meeting, it is one of the annual compliances to get all the details and specifications ready for the annual general meeting. It is in this meeting the agenda, goal and other niceties of the companies are discussed.
Filing of the balance sheet
Another compliance that requires extreme care. It is mandatory to file the details of the balance sheet before the due date.
Filling of AOC 4 (Balance Sheet and Profit & Loss Account), ADT 1 (Appointment of Auditors), MGT 7 (Annual Return)
All these must be filed with their respective documents.
There are the mandatory annual compliances. A company that follows them duly is expected to have their business-running smooth simple.