HomeArticlesBusiness CompliancesAnnual Compliances for a Private Limited Company

Annual Compliances for a Private Limited Company

As per Section 2(68) of Companies Act, 2013, “Private Company“ means a company having a minimum paid-up share capital as may be prescribed, and which by its articles:
i)restricts the right to transfer its shares;
ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member:
Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;

Every Private Limited Company shall have to follow certain compliances as per Companies Act, 2013 on regular basis.

Income Tax Compliances

  1. Quarterly payment of the advance tax
  2. Filing of the Income Tax returns
  3. Tax audit (mandatory in case the turnover or gross receipts of a business exceeds Rs. One crore in the previous year relevant to the assessment year.)
  4. Filing of the Tax Audit report.

Statutory Audit Compliances

The statutory audit compliances are carried to determine whether the financial information of the organization provides true and fair view of the financial position and operating results by examining the bank balances, bookkeeping records, and financial transactions. A statutory auditor of the company is appointed. The auditors of the company will finalize annual accounts.

Annual ROC Filings

The Private Limited Companies must file the annual accounts and returns disclosing the details of its shareholders, directors, etc., to the companies’ registrar. As a part of the annual filing, the following forms are to be filed with the ROC:

  1. Form MGT-7 (Annual returns) must be filed within 60 days of holding the annual general meeting.
  2. Form AOC-4 (Financial statements) is to be filed by a private limited company within 30 days with the balance sheet and the statement of profit and loss account and Director report.

Annual General Meeting

It is necessary to hold a meeting of the shareholders once every year within six months from the financial year’s closing. 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 registration of the company or the city, village, or town in which the registered office is situated.

Board Meeting

It is mandatory to conduct the first meeting of the Board of Directors of a company within 30 days of incorporation of the company. There should be four board meetings held every three months in which a minimum of 2 directors or 1/3 rd of the total number of directors, whichever is greater, are required to be present. Further, the meeting’s discussion needs to be drafted and recorded in the minutes of the meeting and maintained at the company’s registered office. A notice should be intimidated seven days in advance about the date and the purpose of the meeting.

Directors Report

The Director has to disclose details about his directorship in other companies every year. This can be done by giving a declaration in writing to the company every year.

Event-Based Compliances

Even based compliances are those who get triggered upon following of certain events like change in directors, change of registered office, change in approved share capital etc. Hence, it is essential that the happening of such events get tracked, and docility met with on time to avoid penalties or additional fees. Some of the Event-based agreements are mentioned below:

  1. Change in registered office (INC-22)
  2. Change in Directors or KMP (DIR-12)
  3. Increase in Authorized Share capital (SH-7)
  4. Filing of resolution and agreements (MGT-14)
  5. Increase in Paid up share capital (Issue of security) (PAS-3)
  6. Change in secured borrowing (Creation, modification and satisfaction of charge) (CHG-1)
  7. Application for KYC of Directors (DIR-3 KYC)
  8. ACTIVE (Active Company Tagging Identities and Verification) (INC-22A)
  9. Declaration of Commencement of Business (INC-20A)

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