Mandatory Compliance Checklist For Private Limited Company

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What is a Private Limited Company?

A private limited company (PLC) is a legal business structure that provides its shareholders with limited liability. A PLC is incorporated under the Companies Act 1956 and operates as a separate legal entity. Unlike public companies, private companies have fewer reporting requirements. However, they do need to file annual returns with Companies House. These filings provide information about the company’s financial performance and activities.

How does a private company differ from a public company?

The biggest difference between a private company and a public company is the way in which the two entities are governed. Public companies are governed by a board of directors who are appointed by the government. Directors are responsible for overseeing the operations of the company. Private companies are governed by a body called the board of directors. Shareholders elect the board of directors at general meetings.

Compliance- Private Limited Companies

The term compliance means the ability to comply with a set of orders, rules, and requests. Any private limited company registered in India must ensure that they meet the compliances with respect to the Companies Act 2013.

The Companies Act, 2013 is meant to regulate the qualification, remuneration, appointment, and retirement of the company’s directors. It also overlooks other aspects such as conducting board meetings and shareholder meetings.

The Companies Act, 2013 allows Private limited companies to act as a separate legal entities. Thus, being a legal entity, the companies are entitled to fulfill the stipulated compliances as directed by the Act. These compliances are to be duly met irrespective of the company’s annual turnover. In case of any failure, the company would be eliminated from the register of Registrars of Companies (RoC)

What are the ROC compliance for Private limited company

The Registrars of Companies (RoC) allows the government to understand the company’s performance and turnover during a financial year.

The compliance for a private company can be divided into two broad categories:

  • Mandatory RoC Annual Compliance
  • Event-Based RoC Compliance

 

Mandatory Annual Compliance

Compliances Details
Appointment of Auditor and Annual General Meeting(AGM)  The first Auditor has to be appointed within 30 days and the appointment is confirmed by the shareholders in the  First Annual General Meeting (AGM) of the company. 

In case the company fails to appoint an auditor, they will not be allowed to continue with the business and will also be charged with a penalty of INR 300.

The auditor is supposed to fill Form ADT-1 that is duly approved by the shareholders in the first AGM. It needs to be filed within 15 days of the AGM.

The first AGM is to be held within 9 months of the end of the financial year post which the AGM is held twice every year. The gap between two consecutive AGM should not be more than 15 months

Annual Board Meeting First meeting within 30 days of incorporation.

A minimum gap of 120 is required between the 2 meetings and the meeting must be attended by ⅓ rd of the number of directors or a minimum of 2 directors. The meeting is supposed to be recorded for official purposes.

Directors’ Report The directors’ report is to be filed covering all the information required for Small Company under Section 134. The report has to be signed by the Chairperson authorized by the Board.
Maintenance of Statutory Registers  The form AOC-5 has to be filled out within 7 days of executing the board resolution to notify the RoC of the available space. Along with that, the Statutory Registers such as the Register of Members/ Directors and KMP/ Shareholders/ Beneficial owners/ Loan, Contract and Arrangements/ Deposits/ Related Parties, Transactions, etc.; Minutes Book of Board Meeting / AGM /Other Meeting; Books of Accounts; Financial Statements; ROC File, etc., is to be regularly maintained and updated.
E- Forms Filing Requirements Form INC-20A is a declaration for the commencement of business that is to be filed within 180 days of the date of incorporation of the company.

Form AOC-4 is a declaration of the financial statements that include the balance sheet, a statement of profit and loss, and the director’s report. The form must be filed within 30 days of holding the Annual General Meeting.

Form MGT-7A is the declaration of the annual returns for small companies and is supposed to be filed within 60 days of the AGM.

Form DIR-12 is the declaration of the appointment/resignation of any of the directors. It is supposed to be filed within 30 days of appointment/Resignation.

Form DIR – 3 KYC is the declaration that ensures that every director of the company files KYC whose DIN is allotted on or before 31 March, within 30th September every year.

Form DPT-3 declaration is to ensure that every company should file the return furnishing information about any deposits and/or outstanding receipts of loan or money other than deposits within 30th June every year.

Form MGT 14 is the filing of a resolution with MCA. It includes the details of the resolutions passed at the board meetings that should be filed within 30 days of passing any board resolutions.

Circulation of Financial Statement. Companies are supposed to be sent to their members- approved Financial Statements along with the Directors’ Report and Auditor’s Report at least 21 clear days before the AGM.

Event-based RoC Compliances

Event-based compliances are to be filed when a company under its course of business undergoes specific changes. Such events are usually related to the allotment of new shares, giving or taking loans from other companies, change of directors, appointment or change of statutory auditors, etc.

Below are the specific event-based compliances for a private company:

Compliances Details
Commencement of Business Form INC-20A is to be filed within 180 days of the incorporation of the company.
Active Company Tagging Identities and Verification Form INC-22A is to be filed before 31st December. 
Change in Registered Office Form INC 22 is to be filed within 15 days of any such change.
Change in Directors  Form DIR-12 is to be filed within 30 days of any such change.
Change Company’s Name Form INC-24 is to be filed within 60 days from the date of applying for the name.
Increase in Authorized Share Form SH-7 is to be filed within 7 days of passing an ordinary resolution.
Filing of Resolution and Agreements Form MGT-14 is to be filed within 30 days of passing the resolution.
Change/Increase in Paid-Up Share Capital Form PAS-13 is to be filed within 15 days from the date of allotment.
Application for Director’s KYC  Form DIR-3 KYC is to be filed before 30th April of the next financial year.
Any Change in Secured Borrowing Form CHG-1 is to be filed which includes all types of charges within 30 days of its creation.
Removal of Director Form ADT-2 is to be filed within 30 days of passing the resolution.
Deposits taken Form DPT-3 is to be filed annually before 30th June and is to be audited for that financial year.
Significant Beneficial Owner reported Form BEN-2 is to be filed within 30 days of receipt.
Condonation of Delay Form CG-1 is to be filed in condonation for the delay with CG along with other required documents.

Frequently asked questions:

What will happen if the ROC is not filled?

If the company fails to file the ROC then it is liable to pay penalties. The company will be liable to pay a penalty of Rs. 50000. In case of further failure by filing the ROC Rs. 100 be penalized per day subject to a maximum of Rs. 500000 as a penalty.

Is audit compulsory for private limited companies?

It’s compulsory for every private limited company to get their annual accounts audited every year as per the Act and Companies (Accounts) Rules, 2014

What are ROC fees?

To file ROC companies do have to pay government fees. The process of filing ROC is completed only after RoC fees are paid in full.

Conclusion

Often these compliances can get overwhelming, especially if you are starting out as an entrepreneur. We at Asanify have a robust process to help you deal with these compliances and make your journey of entrepreneurship hassle-free.