Private Limited Company Compliances
When it comes to business entities, Private Limited Company is the most preferred and popular arrangement to carry out their operations, earn profits while enjoying various benefits of an incorporated entity, specifically limited liability. Other than a separate legal entity, limited liability, perpetual succession among numerous other advantages, there are certain mandatory Private Limited Company compliances that private limited companies registered in India must fulfill. Now here comes the entrepreneurial capabilities as just like managing the day to day operations, taking care of and fulfilling online private limited company compliances is also crucial. For this task, one can always take the assistance of a professional who knows inside out of these compliances along with the important dates and loopholes needed to avoid.
According to the latest data, MCA or Ministry of Corporate Affairs has removed more than 2 lakh business entities and has disqualified more than 3 lakh company directors for failing to comply DIR-3 KYC and several other provisions that fall under Companies Act of 2013. Non-compliance of these provisions can lead to heavy penalties as well. The online startups and private limited company compliance process can be understood in the following manner.
Let’s discuss them one by one:
First Board Meeting: The first board meeting should be held within 30 days of incorporation of the company. The notice declaring the date of the first board meeting should be delivered to the board of directors seven days prior to the meeting.
Other Board Meetings: There should be at least 4 other board meetings annually. The maximum gap between the two board meetings should not be more than 120 days.
Filing of Disclosure of Interest by Directors: Every individual director present at:
First board meeting that he attends as director; or
First board meeting of every financial year; or
Whenever any change is made in the disclosure
First Auditor: The Board of Directors needs to appoint the first auditor of the company within the initial 30 days of the incorporation of the company. The auditor holds the office till the 1st AGM. Filing of ADT-1 is not obligatory in the case of the first auditor.
Succeeding Auditor: Board of Director need to appoint an auditor during the first annual general meeting. The auditor would hold the office till the sixth annual general meeting and would inform ROC regarding the same by filling ADT-1. It is the company’s responsibility to file Form ADT-1, not of the auditor, within 15 days of appointment.
Annual General Meeting: There should be one annual general meeting and there should be a gap of at least 15 months between two subsequent annual general meetings. Here the main focus should be on the appointment of an auditor, financial statement, remuneration and declaration of dividend.
Filling of Annual Returns: The company has to fill and submit the Form MGT-7. The form should be filled within 60 days of the Annual General Meeting. The form should have the following details:
Details of the meeting (Board meeting or members meeting)
Registered office and principal place of business along with other holdings and associate companies
Debenture holders/members including the changes made
Key managerial personnel, Directors and Promoters (mention the changes made)
Remuneration of Directors and Key managerial personnel
Details of the legal matters that the company is involved in
Penalty and fine imposed on the company
Debentures, shares and other securities
Liability or indebtedness
Certification of compliance matters
Filling of Financial Statements: Financial statements have to be filled in Form AOC-4 within 30 days of the annual general meeting with the respective ROC. This should include documents like Balance Sheet, Consolidated Financial Statement, Profit & Loss Account, Director’s Report, etc.
Different Annual Compliances under other Laws: These compliances are related Income Tax, GST Act , TDS, PF and ESI regulations etc.
Income Tax Returns: Income tax returns have to be filed with the IT department before 30th July yearly, If the company crosses certain limits then, there is a requirement of tax-audit also.
GST : For all the entities registered under GST law, are required to submit GST returns monthly, quarterly and yearly before due dates. In case of a private limited company registered under GST laws, then it has to submit the returns of its sale and purchase using various GST forms (i.e. GSTR1, GSTTR2, GSTR 3B etc) on or before due date to avoid penalties
TDS : TDS or Tax Deducted at Source are required to be deducted against the identified expenses/payments on which the government has prescribed a specific rate of deduction. At the time of making payment to any party, the deductor is required to deduct tax at source and pay the collected tax to the government. 7th day of next month is the last date of TDS Payment. Every deductor who has been applied a TAN number shall file the quarterly return of TDS. The TDS return is a quarterly exercise and is of two types, viz one for deductions while making payment of Salary. while the other is for all other cases. All the private limited companies having TAN no and deducting TDS shall submit the returns of TDS within due date to avoid penalties
All the private limited companies which are registered under EPF & ESI act, are required to submit the return of PF & ESI before the due date, and it is a mandatory requirement of law, which attracts the penal provisions if not complied with.
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