Annual Compliance - Private Limited Company

Annual Compliance of a Private Limited Company

Private Limited company is the most popular form of starting a business .There are various type of company compliances those are to be followed when a business  incorporated . For a Private Limited Company, it is compulsory to file an annual return and audited financial reports with ROC for every fiscal year. Whatever be the turnover or current business status, annual compliance for a company is a must for all. Continuous failure to file the regular compliance may lead to the elimination of the company from the ROC register.

Compliances for newly incorporated Company

A newly incorporated company has some onetime compulsory filings to start its business journey as a Company:

  • Appointment of First Auditor (ADT-1): A newly incorporated company must appoint its first Auditor within the 30 days of its incorporation for conducting statutory audit of books of accounts of the company for the financial year. The appointment of Auditor should be intimated to the ROC through ADT-1 form with necessary documents. The first Auditor shall hold the office till the conclusion of the first Annual General Meeting.
  • Commencement of Business (INC20A): Any company that incorporated after 2nd November 2018 and having a share capital shall not commence any business activity without this one time filing. As per Company Law, a declaration to be filed by the directors within 180 days from the date of incorporation in INC20A Form with the ROC that every subscriber to the MOA has paid the agreed upon shares to be taken by him on the date of making such declaration.

Regular yearly Compliance for a Private Limited Company

Following compliances and filing are mandatory for each fiscal year for a company:

  • First Board Meeting: First board meeting of the company along with the Directors within 30 days of incorporation of the company. Minutes of meeting should be prepared and declaration of board meeting must be sent to each director at least 7 days before the meeting.
  • Subsequent Board Meetings: Minimum of 4 board meetings to be held each year with a gap of not more than 120 days between two meetings.
  • Acknowledgement of Interest by Directors: A Director of a Private Limited Company is required to compulsorily disclose his concern or interest including shareholding interest in any other organisations by giving a notice in Form MBP-1
  • Subsequent Auditor: The Board of Directors shall delegate the Auditor in first AGM of the company who shall hold the position till the conclusion of 6th AGM and shall notify the same to ROC by filing ADT-1.
  • Annual General Meeting (AGM): Every company required to have a Annual General Meeting on or before 30th September on a working day at the registered office of the company. A notice is required to be given in advance regarding the same.
  • Filing of Annual Return (MGT-7): Annual return for the period 1st April to 31st March to be furnished by every Private Limited Company every year within 60 days of operating of Annual General Meeting. It is a mandatory compliance for all registered companies to file this annual return in form MGT-7. The last date for filing MGT-7 is generally 29th November every year.
  • Filing of Financial Statements (AOC-4): Every company is expected to file its balance sheet, along with the statement of Profit & Loss account and Director Report in Form AOC-4 within 30days of Annual General Meeting.
  • Statutory Audit of Accounts: Every company should prepare its accounts and get it audited by professional/Chartered Accountant at the end of the financial year. The Audited financial statements along with Audit Report should be filed with the Registrar.

Benefits of Regular Annual Compliance

  • Regularity in the compliance is a increases the business credibility of a company. Moreover the compliance status of a company is shown on the MCA portal. Proper compliance records attract more customers and helps in obtaining government tenders and loan approval.
  • Every investors give importance to financial records and compliance status of a company before investing. So, to attract more investors, it’s important to file annual returns regularly.
  • Non-adherence to regular compliance attracts huge penalties that may disrupt the company profitability. Failure to file the annual compliance can also reduce the status of the company’s business.

Documents Required for Annual Compliance

To prepare the total annual compliance of a company, the following documents generally serves the purpose; other than any special case.

  • PAN Card of the Company
  • Certificate of Incorporation
  • MOA and AOA of the Company
  • Audited financial statements
  • Audit Report and Board Report
  • DSC of Directors.

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