Compliance is the backbone of any company. In addition to the fact that it is mandatory, it is also vital for an organization to adhere to all the fundamental compliance work in order to ensure that the organization is properly working in agreement to the tenets and directions set around the pertinent statutes.
There are different types of companies which have been provided under the Companies Act, 2013 and “private limited company” is one of them. It is the most preferable form of company amongst entrepreneurs. Not just incorporation of a private limited company requires the compliance with various laws, but also after its incorporation the compliance work is of utmost importance.
Under the Companies Act, 2013, there are provisions which a private limited company needs to comply with; some are mandatory compliances and others are event based compliances. Mandatory compliances are to be followed by the companies irrespective of any factor such as their capital and the nature of business they conduct. Generally, event based compliances are to be made on the incidence of a particular event in the company like change in directorship, alteration in capital clause, and alteration in object clause, etc.
Statutory auditors are to be appointed and such appointment of auditors will be for 5 years by filing the form ADT-1. Also, the first auditor is to be appointed within 30 days of such incorporation. In case of newly incorporated company, Auditor may be appointed either by Board of Directors within 30 days of Incorporation of Company or it may be appointed by members in Extraordinary General Meeting (EGM) within 90 days of incorporation and then ratification or re-appointment is required in every consequent Annual General Meeting (AGM) of the company.
Share Certificates to the subscribers of memorandum are to be issued within 60 days of incorporation of company.
According to the Act, a Company Secretary in Practice shall certify every private limited company having paid up share capital of 10 Crore or more or turnover of Rs. 50 crore or more.
Disclosures of interest in any other business entity is to be given by the Directors in first Board Meeting in which they participate as a Director and subsequently in First Board Meeting of every financial year in FORM MBP-1 to the Company.
A minimum number of four meetings of Board of Directors shall be held by every such company in every year, keeping in mind that maximum gap between two meetings should not be more than 120 (One hundred twenty) days. Company should hold at least 1 (one) Board Meeting every quarter of calendar year.
Annual General Meeting are needed for the smooth functioning of the company’s business and there is a need that a prior notice be sent to all who are supposed to be present in such meeting. Notice of Annual General Meeting will be sent to following:
- All Directors,
- Statutory Auditor
- Secretarial Auditor (if any).
Maintenance of registers of the company is another prerequisite. Company is required to maintain the following Statutory Registers:
- MGT-1: Register of Members
- MGT-2: Register of Debenture Holders
- MGT-3: Foreign register of members, Debenture Holders other security holders or beneficiary residing outside India
- FORM SH-2: Register of renewed and duplicate share certificate
- FORM SH-3: Register of Sweat Equity Shares
- FORM SH-6: Register of Employee Stock Options.
- FORM SH-10: Register of Shares or Securities bought back
- FORM CH-7: Register of Charges
The company also requires to circulate its Financial Statement & other relevant documents such as Cash Flow Statement, Directors’ Report and Auditors’ Report at least 21 days before the Annual General Meeting to all its members.
The Annual Return of every private company is to be filed within 60 days with registrar of companies and should be signed by Company Secretary in Practice., if there is no whole time Company Secretary.
A report by Board of Directors shall be attached to statements laid before a company in general meeting, which contains the details with regards to the state of the company and its compliance with a set of financial, accounting and corporate social responsibility standards.