What is ROC Compliance for Private Limited Company?

Any kind of business needs an entity through which it can be recognised in the market. In India, there are many types of entities, and Private Limited companies are one of them. Private Limited companies are highly recommended for startups. They are the companies that were formed or incorporated under the Companies Act 2013. Each and everything regarding these companies has been governed by the Companies Act. These companies are good for almost all types of businesses which are working on a good level.

Private Limited Companies are the kind of entities that offer reliability, credibility, trustworthiness and transparency to businesses. The benefits associated with these companies help the businesses to grow in the market between the competitors. If one is incorporating a Private Limited Company, then there is certain ROC compliance for Private Limited Company which these companies have to comply with. Noncompliance with such compliances may result in heavy penalties, and these penalties are good enough to collapse a business. Private Limited Companies have many benefits, but to take these benefits, one needs to comply with the ROC compliance for Private Limited Company.

What are ROC compliances?

Every Private Limited Company, as per the Companies Act of 2013, needs to inform the Registrar of Companies, popularly known as ROC, regarding every minor or major change in the company’s name, objective of the company, article of association of the company, appointment of directors, appointment of auditors,  passing of board resolution etc. Providing all this information to the registrar of Companies is known as ROC compliance for Private Limited Company. These ROC compliance for Private Limited Companies are of two types which are given below:

• Mandatory ROC Annual Compliances
• Event-based ROC Annual Compliances

Important Compliances of Private Limited Companies

There are many ROC annual compliance requirements for Private Limited Company. All of them are equally important, and one needs to comply with all of them. Any single compliance cannot be ignored. For better management and maintaining transparency, ROC needs all Private Limited Companies to comply with all of them. Following are some important ROC compliance for Private Limited Company:

Board Meeting of Private Limited Company

It is mandatory for all Private Limited Companies to conduct their first board meeting within 30 days of the incorporation or formation of the company. Annually two board meetings are compulsory.  At least two directors or one-third of the total directors whichever is greater must attend the board meeting. For maximum participation, it is required to inform all the directors about the board meeting seven days in advance.  Also, the minutes of meetings must be recorded and maintained by the company.

Annual General Meeting or AGM of Private Limited Company

All the companies including Private Limited Companies have to hold a mandatory Annual General Meeting.  In such meetings, many things regarding company management, financial goals or objectives or purposes, appointment of auditors and directors etc., have been discussed.  The first Annual General Meeting (AGM) of a company should be organised within 9 months after the end of its financial year. After that, every subsequent AGM should be held within 6 months of the end of each financial year. 

It’s important to ensure that the time between two AGMs doesn’t exceed 15 months. This means that companies must hold these meetings regularly to keep shareholders informed and engaged, and the gap between them should not be too long. All company members must be informed about the AGM at least before 21 days so that there will be maximum participation in the Annual General Meeting of the company. However, it is not mandatory to serve prior notice of 21 days. Even on a shorter notice period, an AGM can be held.

Declaration of Interest by the Directors

Under company law, one director is allowed to become part of more than one company. If any director is part of another company as well, then he or she needs to give notice regarding the interest to the company. The form for this purpose is MBP-1. That notice of interest must be served in the first board meeting itself. There is nothing wrong with serving more than one company but it must be revealed by the directors.

Filing of Tax and Annual Returns of the Company

Filing of tax and annual returns are the two important ROC compliance for Private Limited Company. The accounts of the company are mandatorily audited without ignorance. With audit compliance, one needs to file an income tax return as well; for every financial year income tax return needs to be filed.  

Every year, a company has to file two important forms: AOC-4 for its financial statement and MGT-7 for its annual return. AOC-4 should be submitted within 30 days after the Annual General Meeting, while MGT-7 needs to be filed within 60 days after the Annual General Meeting. Both of these forms are mandatory, so a company can’t skip them. It’s important to meet these deadlines to stay compliant with the regulations. Ignorance can result in heavy penalties.

Maintain Statutory Registers

For the record purpose, it is mandatory for every Private Limited Company to maintain a statutory register. These registers must be updated on a regular basis. These registers contain details like minutes of the board meeting, details of the Annual General Meeting, what has been discussed in the Annual General Meeting, who are the directors of the company, who are the shareholders of the company, who are the members of the company, details of share certificates, details of debentures holder meeting etc.

Directors KYC

It is one of the most important ROC compliance for Private Limited Company .  Ignorance of this compliance results in the deactivation of a very important document of the director, that is the Director Identification Number. With the cancellation of DIR, there is a fine of Rs. 5000 for delayed filing of the form.  Hence, it is suggested better to file this compliance on time. To comply with this compliance, one needs to file DIR-3 with the Registrar of Companies. It is required to be filed for each financial year.

Commencement of Business

Companies are formed or incorporated for doing any kind of business or similar activities. Similarly, Private Limited Companies are also incorporated for certain kinds of business or related activities. Hence within 180 days of the incorporation of the business company needs to commence its business. Also as proof of commencement of business the company needs to file a certificate of commencement of business to the Registrar of Companies. The company’s certificate of commencement was filed through form INC-20A.

Event-Based ROC compliance for Private Limited Company

There are many changes in a company after it is incorporated. These changes may be related to the name of the company, directors of the company, company’s address, details regarding members, change in the list of shareholders etc. Any kind of change needs to be informed to the registrar of the companies. Similarly, the changes mentioned above also need to be informed to the ROC. These changes are known as event-based ROC compliance for Private Limited Company.  Some of the important event-based compliances are given below:

• If there is any change in the authorised share capital of the company, then this also needs to be informed to the ROC within 30 days through form SH-7.
• If any special resolution was passed in the company, then it needs to be informed to the registrar of companies. The form through which it can be informed to the registrar of companies is MGT-14. It is mandatory to inform the registrar of the company regarding such special resolution within 30 days of passing such resolution.
• The allotment of shares from PAS-3 needs to be filed with the registrar of companies.
• For the registration of charges created or modified, the registrar of companies needs to be informed through an e-form called CHG-1. This form needs to be filed within 30 days of registration of charges, or maximum, it is allowed to be filed within 120 days after paying the required supplementary fees.
• Within 30 days after the satisfaction of charges, the company needs to inform the ROC regarding the same through form CHG-4.
• If any auditor resigns after the appointment, then it must be informed to the registrar of companies within 30 days of such resignation through form ADT-3.
• Before 30th June of every year, all Private Limited Companies need to file DPT-3 to inform the ROC regarding the returns of money and deposits.
• Registrar of companies must be aware of the resolution and agreements that any Private Limited Company has signed; hence, every company needs to file MGT-14 before the ROC regarding the resolution and agreements of the company.
• If any Private Limited company has substantial beneficial ownership, then it must be informed to the registrar of companies through form BEN-2. 

Summary of the ROC Compliance for Private Limited Company

When we talk about ROC compliance for Private Limited Company, they are not two or three. The number is too much to learn all of them. Hence for a better understanding of the compliances given below is the table of all of them. This table can help to determine which form is there to file which compliance.

Benefits of the ROC Annual Compliances

ROC compliance for Private Limited Company is not just formality; there are many benefits they provide to the companies. Some of the advantages of complying with compliances are given below:

• Reliability of the investors and the customers
• Trustworthiness among the customers, investors and shareholders
• Credibility in the market amount the competitors
• Transparency creates value for the company in the market

Documents required for Completing ROC Compliances

Following is the list of documents required for completing the ROC compliance for Private Limited Company :

• KYC documents  of the directors as well as  shareholders of the company
• MOA, its full form, is the Memorandum of Association of the company
• AOA, its full form, is the Article of Association of the company
• Details regarding members of the company
• Details regarding the auditor of the company
• Incorporation certificate of the company
• Bank statement of the directors of the company
• GST Registration certificate of the company
• ESI  and PF certificate of the company
• Shop and Establishment certificate of the company
• MSME Registration certificate of the company, if any

Conclusion

ROC compliance for Private Limited Company in India is a very important aspect of maintaining legal and operational compliance of any company in India. These compliance requirements categorised into mandatory annual compliances and event-based compliances, ensure transparency, credibility, and trustworthiness in the business environment. 

By complying with these regulations, companies can not only avoid heavy penalties but also gain several benefits, including reliability for investors, trust among customers and shareholders, credibility in the market, and enhanced transparency. It is imperative for Private Limited Companies to meticulously follow all the prescribed forms and timelines associated with these compliances to build a strong and sustainable presence in the competitive business landscape.