With various advantages & benefits given to private limited companies, it is necessary for them to prove that they are worthy of these advantages & benefits by complying with the provisions and rules of the Companies Act, 2013 right from the date of incorporation.
Following are the common Annual Compliance of the private limited company:
The appointment of an auditor is mandatory in every company, public as well as private. The Companies Act, 2013 provides that the company is required to appoint an auditor within one month from the Date of incorporation. The act also provides that, an Auditor can be appointed for a period for 5years.
Every Private Limited Company is required to prepare its Accounts for the Financial Year and mandatorily get them audited by a Chartered Accountant at the end of the Financial Year compulsorily. The Auditor is required to provide an Audit Report for the Audited Financial Statements as they are required to be filed with the ROC.
Every Private Limited Company is required to file its An Annual Return in Form MGT-7 is Required to be filed within 60 days of Annual General Meeting. Annual Return will be for the period 1st April to 31st March. The annual returns will be calculated from 1st April to 31st March.
The Balance Sheet, Statement of Profit and Loss Account and the Director Report are required to be filed by the private limited company within 30 days of Annual General Meeting with the ROC in Form AOC-4.
An annual general meeting is mandatorily required to be held in every calendar year. However, it is required to be held within six months from the closing of the financial year.
Also, the act says the AGM should not be held on public holidays.
Just like AGM, Board meetings are essential for a private limited company. The first board meeting of a company is to be conducted within a period of 30 days from the date of incorporation. Minimum four board meetings are required to be conducted during the year and the time gap between two board meetings should not exceed 120 days.
However, for small start-up private limited companies, there is an exception. They are allowed to conduct, minimum of two board meetings instead of four.
The notice of the Board meeting is required to be sent to every director at least 7 days before the date of the board meeting.
Minimum 2 directors or where there are more than 2, 1/3rd of the total number of directors, whichever is greater, should be present at the Board meeting. The Minutes of the Board Meeting is required to be made in the prescribed format & maintained at the Registered Office of the Company.
The Companies Act, 2013 provides that a Directors’ Report is required to be prepared to mention all the information that is required under Section 134. Also, every director is under an obligation to provide the details about all the directorships held in other companies every year. This is required to be made in writing and in a prescribed format.
The Company is required to maintain the statutory registers and records as mentioned in Act. Following are important Registers are required to be maintained by the private limited Company
There are many other compliances which need to be done on happening of the following events in the Company:
The respective forms are required to be filed with the ROC within the specified time for all such events. Delay in such filings attracts the penalty or additional fees which keep on increasing as long as the non-compliance continues.
If the Private limited Company fails to comply with the rules and regulations of the Companies Act, then the Company and every officer in default are punishable with fine as provided by the Act for the period during which the default continues.
Hence, the private limited companies should ensure that they remain compliant since “it takes less time to do things right than to explain why you did it wrong”.