Compliance for Private Limited Company

All the Companies Registered in India are governed by the provisions of Companies Act, 2013 (An act of Parliament which regulates the working of Companies and legal limits within which companies may do their business). Government strike off more than 2 Lakh companies and disqualified more than 3 Lakh directors for non-compliance of various provisions of Companies Act. Company law provides legal compliance that are required to be followed by every company like reporting of financial results, reporting of changes in management, maintenance of statuary registers, auditing of accounts etc.

The following are some of the common compliances which a private limited company has to mandatorily ensure:

1. Appointment of Auditor  

Auditor will be appointed for the 5years and form ADT-1 will be filed for 5-year appointment. The first Auditor will be appointed within one month from the date of incorporation of the Company.

2. Filing of Annual Return (Form MGT-7)

1. Private Limited Companies are required to file its Annual Accounts and Returns disclosing details of its shareholders, directors etc. to the Registrar of Companies. Such compliances are required to be made once in a year.
2. As a part of Annual Filing, the following forms are to be filed with the ROC:
3. Form MGT-7 (Annual Return): Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March.
4. Form AOC-4 (Financial Statements): Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Director Report in this form within 30 days of holding of Annual General Meeting. 

3. Statutory Audit of Accounts   

The purpose of a statutory audit is the same as the purpose of any other audit to determine whether an organization is providing a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records and financial transactions.

• Appointment of the Statutory Auditors of the Company.
• Finalise Annual Accounts with the Auditors of the Company

4. Holding Annual General Meeting 

• Every Private Limited Company is required to hold a meeting of its shareholders once in every year within a period of six months from the date of closing of the financial year.
• The primary agenda of an AGM includes approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, appointment and remuneration of directors etc.
• The Annual General Meeting shall be held during business hours on a day which is not a public holiday and shall take place at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated.

5. Preparation of Directors’ Report           

Every director has to disclose about his directorship in other companies every year. This shall be done by giving a declaration in writing to the company every year in a specified Directors’ Report format.

6. Board Meetings

1. The First meeting of the Board of Directors of a Private Limited Company shall be conducted within 30 days from the date of Incorporation of company.
2. Further, minimum Four Board Meetings shall be held in a calendar year (one meeting in every 3 months). In case of a Private Limited Company which is classified as a “Small Company”, atleast two Board Meetings shall be held in a calendar year (one meeting in every half year)
3. Most of the startups fall within the category of “Small Company”.
4. Minimum 2 directors or 1/3rd of the total number of directors, whichever is greater, are required to be present in meeting of the Board of Directors. The discussions of the meeting need to be drafted and recorded in the form of “Minutes of the Meeting” and maintained at the Registered Office of the Company.
5. Directors should be intimated about the date and purpose of the meeting by giving a notice atleast 7 days in advance from the date of the meeting.

7. Maintenance of Statutory Registers and Records

A Private Limited Company has to maintain various statutory registers and records as required by the Company law such as Register of shares, Register of Members, Register of Directors etc. Besides, Incorporation documents of the company, Resolutions of the meetings of the Board of Directors, Minutes of the Board Meetings and Annual General Meeting etc are also required to be preserved by the Company.

Such records are to be kept at the registered office of the company and shall be open for inspection to its members during business hours. Also, the books of account of every company relating to a period of atleast eight financial years should be preserved and kept in good order.

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