Compliance of Private Limited Company

Annual compliance is the mandatory formality for every Company. Companies need to spend some money for your Compliance. Private limited Company needs to abide certain mandatory compliances in order to function smoothly. In this article, you will get the answer all the queries which you might have with regard to annual compliance filing for a private limited company It is not an easy task to run a company since there so many procedures need to do Business. In a company, there is so many departments which director has to supervise such Marketing, Sales, IT, Operations etc. Due to this Private limited Companies are advised to follow compliance so that it face any problem in future. 

According to companies act, 2013 there are certain changes which came into existence.There are some changes in the guidelines for the private limited companies but the majority of the compliances continue to be what they were under the previous law ie. Companies act, 1956.

Following are the formalities that Companies need to file

• Notice of the AGM
• Director’s report
• Auditor’s report
• Balance Sheet

Annual compliance is mainly two way process broadly, is a two time process. Firstly,  When the process commences, there are certain steps to be followed like the appointment of the auditor, preparation of share certificates, preparing statutory certificates. These are steps for a company is good to initiate the process. Another process or we can say the second step is annual filing that is a bit tricky and requires a certain degree of effort.

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 .

• 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

Read more about Board meeting is an event or discussions which should be help at-least four times in a year. This meeting is mainly for directors of the company. Meeting must be signed and Minutes need to maintained in Registered office.   

Annual general meeting needs to be held every year. This is mainly held for shareholders and the primary agenda of the meeting is financial statement, declaration of dividends and many other agenda. This meeting should be held at the place in the registered office. 

Filing Annual Return is the most important aspect annual compliance filing. An annual return consists of following pointers

• Shares, debentures and different shareholding patterns of the company.
• Details regarding companies registered offices, principal business, subsidiary and associates.
• The members and debenture holders along with the changes that have happened since the last financial year.
• Loans on the company
• Remuneration of important dignitaries
• The promoters, directors, key managers and the changes that have occurred since the last financial year.
• Penalty or punishment (if any) imposed on the company or its directors or key managers.

Event based Compliances

These are kinds of directors based on the triggered event. It is also very important task needs too fulfilled within a particular time period.  In case of crossing of deadline penalties could be added. Following are compliances needed to be fulfilled 

• Allotment of Share
• Transfer of Share
• Receipt of share Applicant money
• Appointment of Managing Director/Whole time Director
• Appointment and Resignation of director.
• Change in Bank signatories
• Change in Statutory auditors

Cost on Non Compliance

Non-Compliance can create many problems for the business sector and especially among start-ups which are considered. Following are the types of non compliance. 

• Start-ups are found to be on defaulter list of Registrar of Companies due to non-compliance
• Start-ups incur unnecessary pay-out by way of interests and penalties.
• Income Tax Notice to Start-up for tax demands or for non-compliance.
• Shut down of their business within first 3 years of their operations.

Non-compliances creates multi-faceted consequences, such as  ranging from penalties, additional fines to prosecution. Following are some of the brief consequences to give a general idea:

• Barriers in getting Funded
• Availability of Bank loan
• Roadblock in availability of Govt Tenders
• Stamp of a Dormant Company
• Liability of Directors

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.