Why is Annual Compliance Important for Private Limited Companies?
Annual compliance is not just a legal requirement but a strategic necessity for private limited companies. It ensures legal and financial stability, fosters trust with stakeholders and opens doors for growth and success.
Annual Compliance is Vital for Private Limited Companies:
1. Legal Necessity: Avoid hefty penalties & fines imposed by the MCA
2. Trust & Credibility: Build trust with stakeholders & attract investors
3. Financial Stability: Access loans & funding easily
4. Operational Efficiency: Streamline operations & minimize legal issues
5. Maintain Active Status: Prevent company dissolution or being struck off
Key Consequences of Non-Compliance:
1. Monetary penalties & potential imprisonment
2. Disqualification of directors
3. Loss of legal entity status
4. Difficulty in conducting business
What are the documents required for the Annual Filing of a Private Limited Company?
The following documents are required for the Annual Filing of a Private Limited Company
Financial Statements:
1. Balance Sheet
2. Profit & Loss Account
3. Cash Flow Statement (if applicable)
4. Notes to Accounts
5. Auditor’s Report (if applicable)
Annual Return:
1. Form MGT-7 (for companies with share capital)
2. Form 21A (for companies without share capital)
Compliance Certificate:
1. Form 66 (for companies with paid-up capital between Rs. 10 lakh and Rs. 5 crore)
2. Additional Documents (May be required depending on the company's specific circumstances):
Board Resolutions:
1. Approving financial statements
2. Appointing auditors
3. Declaring dividends (if any)
AGM Minutes:
1. Minutes of the Annual General Meeting
Other Relevant Documents:
1. Director’s Report
2. Registers maintained by the company (e.g., Register of Members, Register of Directors, etc.)
3. Statutory auditor's certificate (if applicable)
4. Cost auditor's report (if applicable)
5. Secretarial audit report (if applicable)
6. Other documents as may be required by the MCA or relevant laws
Note:
A. It’s essential to ensure all documents are duly signed and certified as per the Companies Act, 2013 and relevant rules.
B. The specific documents required may vary depending on the company's size, industry, and any specific events or transactions that occurred during the financial year.
C. It is always recommended to consult a qualified professional or refer to the latest MCA guidelines for the most accurate and up-to-date information.
Risk and Benefits
Benefits of following up the compliance:
âž² Good Governance
âž² Ease in getting financial support
âž² Reduces organizational and individual risk
âž² Enhances confidence of shareholders and other stakeholders
âž² It helps in adhering to necessary industry and government regulation
Risk of Non-Compliance
âž² Cessation of business
âž² May lead to civil action by authorities
âž² Public embarrassment
âž² Damage to the reputation of the company and its employees
âž² Punitive action resulting in fines against the company/officials
COMPLIANCE TABLE OF COMPANY
Compliance Applicable on a Private Limited Company & an unlisted Public Limited Company
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Company Law Compliances
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Declaration of Commencement of Business
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INC-20A
Within 180 days from the date of incorporation
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ACTIVE KYC of the company
(for the applicable company)
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INC-22A
Till 25th April 2019 without late fine
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Directors KYC
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DIR-3KYC
Till the 30th of April (or date declared by MCA)
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Disclosure of interest in other entities by the directors.
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Within 30 days of holding a first board meeting
through Form MBP-1
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Directors disclosure of not being disqualified
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DIR-8
Each company directors in each financial year must file a non-disqualification report with the company
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Mandatory Appointment of Auditor
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FORM ADT-1
Every company shall appoint an Auditor within 15 days of the incorporation. However, ADT-1 may be filed post 1st AGM of the Company.
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Meetings of the Board of Directors
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A company shall hold a minimum number of the 4 Board meetings in such a manner that the maximum gap between two meetings not more than 120 days and there is a meeting held in every quarter of the financial year
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Annual General Meeting (AGM)
(Meeting of the Shareholders/members of the Company)
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AGM shall be held within 6 months from the closing of financial year (i.e. on or before 30th September every Year)
First AGM of a Company shall be held within 9 months from the closure of the financial year. (I,e, On or Before 31st December)
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ANNUAL RETURN
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Shall be filed Within 60 days of the date of holding AGM.
The annual return should be filed via form MGT-7 for the period 1 April to 31 March for the respective year.
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Financial Statements
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Within 30 days of holding AGM
Through form AOC-4
Company is expected to file in this form their Balance Sheet along with Statement of Profit and Loss Account, Cash Flow Statement and Directors ' Report.
Annex: Balance sheet, Statement of Profit & Loss Account (including Consolidated Financial Statement), Board of Directors, Auditors ' Board, Statement of Cash Flow and AGM Notice
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GST Compliance
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GSTR-3B
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On 20th,22nd,24th,of every month
(As Applicable)
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GSTR-1 (monthly)
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On every 11th day of the month
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GSTR-1 (quarterly)
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Last date of the month following the quarter ending.
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Income Tax Compliance
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Income Tax Return (ITR) Filing
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ITR-2A
On or Before 30th June of the following year
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Labour Law Compliances
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Annual compliances of PF
(if applicable)
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Annual returns must be filed by the 30th of April in a given year
Through
Form 3A
Form 6A
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What is Annual Compliance for Private Limited Companies?
Annual compliance for Private Limited Companies in India, as per the Companies Act, 2013, involves the mandatory filing of various documents and forms with the Ministry of Corporate Affairs (MCA). These filings ensure that the company operates within the legal framework and maintains transparency.
Key compliance requirements include:
1. Annual General Meeting (AGM): A Private Limited Company must hold an Annual General Meeting within six months from the end of the financial year (March 31), and not more than 15 months should pass between two AGMs.
2. Filing of Annual Return (Form MGT-7): The company must file its annual return within 60 days of holding the AGM. This return contains details about the company’s shareholders, directors, and other key information.
3. Filing of Financial Statements (Form AOC-4): The financial statements, including the balance sheet, profit and loss account, and auditors’ report, must be filed with the MCA within 30 days of the AGM.
4. Director’s Report: A Director’s Report must be prepared and filed as part of the annual filing, detailing the company’s performance and governance.
5. Income Tax Return Filing: The company must file its income tax returns annually before the due date, which is typically September 30 for companies that require auditing.
6. Secretarial Compliance (if applicable): Companies with paid-up capital exceeding certain limits must appoint a company secretary and ensure compliance with secretarial standards.
7. Statutory Audit: Every Private Limited Company must have its accounts audited annually by a chartered accountant and the auditor’s report must be filed along with the financial statements.
8. Event-Based Compliance: These include changes in directors or shareholders, alterations to the company's Memorandum or Articles of Association, share transfers, changes in registered office address, and more.
These filings ensure that the company remains compliant with regulatory norms, maintains good governance, and avoids legal or financial penalties.