In the present time every now and then new businesses have been started. There are different forms of businesses establishing in the market. Their area of work, customers, market may differ but one thing that is common among them all is the entity formation. Every business needs incorporation to get the various benefits. Incorporation can be done in any form out of the various entities given under the law. Some of the most preferred business incorporations are Private Limited Company Registration, Limited Liability Partnership Firm, OPC etc. Mostly the first choice of entrepreneurs is Private Limited Companies due to the various benefits they offer. If you are also an entrepreneur and thinking about incorporating a Private Limited Company, you must know about all the aspects of the same. If you are registering this kind of entity then you must be aware about the mandatory compliances for a Pvt Ltd Company. In the current blog will discuss the mandatory compliances for a Pvt Ltd Company so that there will be no doubt regarding the same.
What is a Private Limited Company?
A company which can be formed with minimum two directors and maximum 200 directors under the Companies Act of 2013, is known as Private Limited Company. There are certain mandatory compliances for a Pvt Ltd Company, which must be fulfilled to secure the company against the fines and penalties.This company is of further three types which includes the following:
- Company Limited By shares
- Company Limited by Guarantee
- Unlimited Liability Companies
This type of company is good for the businesses because of the various benefits it offers to the business and the business owner. Some of the key benefits of the Private Limited Company are mentioned below:
- Reliability
- Credibility
- Transparency
- Trustworthiness
- Growth of business
- Development of business
- Attract customers
What are Private Limited Company Compliances?
According to the Companies Act of 2013, every Private Limited Company is required to notify the Registrar of Companies, or ROC, of any changes, whether small or large, to the company’s name, purpose, articles of association, appointment of directors, appointment of auditors, passing of board resolutions, etc. For a Private Limited Company, ROC compliance is defined as providing all of this information to the registrar of Companies. There are two categories of ROC compliance for Private Limited Companies, which are listed below:
- Mandatory compliances for a Pvt Ltd Company
- Event based compliances for a Pvt Ltd Company
Current blog is all about the mandatory compliances for a Pvt Ltd Company, hence we will discuss only the mandatory compliances for a Pvt Ltd Company in the present writeup. But in case you have any doubt regarding any other event based compliance of the company you can contact us directly.
What are the Mandatory Compliances for a Pvt Ltd Company?
Some of the key mandatory compliances for a Pvt Ltd Company are mentioned below for the reference of those who are thinking about to establish the same or who had already established the same.
Board Meeting of the Company
Within 30 days following the company’s establishment or incorporation, all Private Limited Companies are required to hold their first board meeting. Additionally, the organization is required to record and preserve meeting minutes. This is one of the most important mandatory compliances for a Pvt Ltd Company, hence must be done without any delay.
Annual General Meeting or AGM of the Company
Every company, even private limited businesses, is required to conduct an annual general meeting. In this meeting several important things with respect to the business of the entity will be discussed. Making sure that there are no more than 15 months between two AGMs is crucial. Prior notice for the AGM must be served if even if it is not, it is possible to have an AGM with less notice.
Declaration of Interest by the Directors of the Company
A director is permitted to join multiple companies under company law. Any director who also holds stock in another firm is required to notify the other company of their involvement. MBP-1 is the form that is needed for this. The first board meeting itself is when that notice of interest needs to be served. Serving more than one firm is acceptable as long as it is disclosed by the directors.
Filing of Tax and Annual Returns of the Private Limited Company
Two of the most significant ROC compliances for Private Limited Companies are filing yearly returns and taxes. The company’s financial statements are compulsorily required or needed to be audited, without exception. It is necessary to file an income tax return for each financial year in order to comply with audit requirements.
An organization must submit two crucial forms each year: MGT-7, which is its annual return, and AOC-4, which is its financial statement. The deadline for submitting AOC-4 is 30 days following the annual general meeting, and the deadline for filing MGT-7 is 60 days following the same. These two forms are required, and an organization cannot omit them. In order to comply with the requirements, it is imperative that you satisfy these dates. Ignorance can have fatal consequences.
Maintain Statutory Registers of the Company
It is required of all Private Limited Companies to have a statutory register for record-keeping purposes. Regular updates are required for these registries. These registers include information about the company’s directors, shareholders, and members, as well as minutes from board meetings, annual general meetings, topics discussed at these meetings, share certificate details, debentures holder meetings, and other related information.
Company’s Directors KYC
It is among the most crucial ROC compliances for companies that are private limited. The Director Identification Number, an extremely vital document for the director, will be deactivated if this compliance is ignored. A punishment of Rs. 5000 is imposed for the delayed filing of the form with the cancellation of the DIR. Therefore, it is advised that you submit this compliance on time. One must file a DIR-3 with the Registrar of Companies in order to comply with this compliance. It must be submitted for each fiscal year.
Commencement of Business of the Company
Businesses can be created or incorporated to engage in any type of business activity or related pursuits. In a similar vein, Private Limited Companies are also established for specific business purposes or associated endeavors. Therefore, the company must start operating within 180 days of its incorporation. The company must also submit a certificate of commencement of business to the Registrar of Companies as evidence of the start of its operations. The certificate of commencement for the corporation was submitted using form INC-20A.
Conclusion
Adhering to mandatory compliances for a Pvt Ltd Company is essential for legal and operational smoothness. These requirements cover various aspects, including conducting regular board meetings, holding an annual general meeting, declaring directors’ interests, filing tax returns and annual reports, maintaining statutory registers, and ensuring timely submission of the Director’s KYC. Non-compliance with the mandatory compliances for a Pvt Ltd Company can lead to penalties and legal consequences. Thus, staying vigilant and fulfilling these obligations ensures the company’s credibility, governance, and adherence to regulatory norms, contributing to its sustained growth and success in the competitive business landscape.
