You’ve incorporated your private limited company. That great! Congratulation! But ask someone who has already been running a private company. He’ll tell you it is not easy to run a Private Limited Company. Apart from the regular business-related operations, as a registered entity under MCA, you have to comply with a whole lot of documentation and monthly, quarterly, and annual compliances. So come let’s understand ‘What are the various necessary compliances for a Private Limited Company?’.
Board Meetings: Every Private Limited Company registered under Companies Act 2013 has to conduct at least 4 board meetings annually of which a minimum 1 meeting is to be compulsorily conducted every quarter. All the directors must attend these meetings. The specified minimum quorum for every board meeting is 1/3rd or 2 Directors whichever is greater. Every meeting must be logged and the signed minutes of the meetings to be maintained at the Registered Office of the company.
Commencement of Business: A Private Limited company having share capital cannot start a business until it has obtained the certificate of commencement of the business ministry of corporate affairs. Normally a new company will comply with the required formalities and obtain the certificate of commencement of business from the Registrar within 180 days after the incorporation of the company. Private Limited Company cannot commence any business activities or exercise its borrowing powers without it.
Annual General Meeting (AGM): An annual general meeting of shareholders must be conducted by the company inviting all the share-holders of the company. The meeting shall discuss businesses & agendas like such as approval of financial statements, declaration of dividends, the appointment of auditors, etc. It is important to note that the AGM must be held in the same city in which the registered office of the company is situated.
Annual Filing of Forms: There are multiple forms that need to be filed annually by a Pvt Ltd company along with annual financial statements. It involves the submission of detailed & important information including shareholdings, directors, financials, etc. These forms are to be submitted only after getting certified by a practising Chartered Accountant or a practising Company Secretary. Companies having paid-up share capital of Rs. 10 lakh to Rs. 5 crores have to file a Compliance Certificate from a practising company secretary that the company is complying with all the relevant laws, rules and regulations.
Yearly Forms by Directors: Directors of a private limited company are also required to inform the company about their directorship in other companies on an annual basis.
Maintenance of Statutory Register & Minutes Book: Every private limited company is required to maintain several registers & books including Register of Members, Register of Directors, Register of Contracts, Register of Charges, etc. These books and registers are required to be kept at the registered office of the company and must be available for verification at all times during business hours.
Apart from these major compliances, there are several other event-based compliances. These compliances have to be done on occurring of certain events such as:
· Receipt of share application money,
· Allotment of shares
· Transfer of shares
· Appointment/Resignation of directors
· Appointment of Managing Director/ Whole Time Director
· Executing agreement with related parties
· Change in the Bank signatories
· Change in statutory auditors.
The occurrence of every such event will require submission of paperwork that is to be done and submitted in the deadlines prescribed.
Cost of Non‐compliance:
Non-compliance of an event or even missing a deadline can trigger penalties, additional fees or a compounding of offense, etc. In case the company fails to comply with a particular requirement in time, then the Managing Director/Executive Directors of the company are the “officer in default”. The Companies Act, 2013 also provides for penalty/fine or imprisonment either of the officers in default and/or the company. Further, if the company has not appointed any executive director, in that case, all the directors are treated as “officer in default”.
Hence, it is necessary that the happening of such events be tracked and compliances met with on time.
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