Annual Compliances for Private Limited Companies

Private limited companies must adhere to various legal and regulatory obligations following their incorporation, including annual compliances mandated by the Companies Act, 2013. These requirements are compulsory and must be fulfilled within the specified deadlines.

For a private limited company in India, adhering to annual compliance requirements is crucial to ensure smooth operations and avoid penalties. Here’s a comprehensive list of the yearly compliance obligations:

Registrar of Companies Related Compliances

Appointment of Auditor

Appointing an auditor for a private limited company involves several compliance steps under the Companies Act, 2013. Here’s a detailed overview of the compliances to be followed:

Initial Appointment

First Auditor:

-?????? Timeframe: The Board of Directors must appoint the first auditor within 30 days of incorporation.

-?????? Duration: The first auditor holds office until the conclusion of the first Annual General Meeting (AGM).

Subsequent Appointments

Tenure:

-?????? Appointment at AGM: The company must appoint an auditor at the first AGM.

-?????? Duration: The appointed auditor will hold office from the conclusion of that AGM until the conclusion of the sixth AGM (5-year term).

Form ADT-1:

-?????? Filing Deadline: File Form ADT-1 with the Registrar of Companies (RoC) within 15 days of the AGM in which the auditor is appointed.

-?????? Contents: Details of the auditor, such as name, address, and membership number, along with the company's resolution appointing the auditor.

Preparation of Financial Statements

The preparation of financial statements for a private limited company in India involves several compliance steps under the Companies Act, 2013. Here’s a comprehensive guide to the compliance requirements:

Accounting Standards

-?????? Compliance: Financial statements must be prepared in accordance with the Indian Accounting Standards (Ind AS) or Accounting Standards (AS), as applicable.

-?????? Disclosure: Ensure all necessary disclosures as per the standards are made in the financial statements.

Financial Statements Components: The financial statements should include:

-?????? Balance Sheet

-?????? Statement of Profit and Loss

-?????? Cash Flow Statement (optional for certain private companies)

-?????? Equity change Statement (if applicable)

-?????? Notes to Accounts

Board Approval

-?????? Preparation: The financial statements must be prepared by the finance team and reviewed by the management.

-?????? Approval: The financial statements should be approved by the Board of Directors. A resolution approving the financial statements must be passed in a Board Meeting.

Auditor’s Report

-?????? Audit: The financial statements must be audited by the company's appointed statutory auditor.

-?????? Report: The auditor will issue an audit report which must be attached to the financial statements.

Director’s Report

• Contents: The Director’s Report should include:

-?????? Financial summary/highlights

-?????? Dividend recommendation

-?????? Reserves transfer

-?????? Material changes and commitments affecting the financial position

-?????? Details of significant changes in share capital, if any

-?????? Statement of director’s responsibility

• Approval: The Director’s Report must be approved by the Board of Directors and signed by the chairman or an authorized director.

Annual General Meeting (AGM)

-?????? Presentation: The approved financial statements and the auditor’s report must be presented to the shareholders in the AGM.

-?????? Timeframe: The AGM should be held within six months from the end of the financial year (by 30th September).

Filing with Registrar of Companies (ROC)

1.???? Form AOC-4: File the financial statements along with the necessary attachments (including the Director’s Report and Auditor’s Report) with the Registrar of Companies (RoC) using Form AOC-4.?

-?????? Deadline: Within 30 days of the AGM.

-?????? Attachments: Financial statements, Director’s Report, Auditor’s Report, and any other relevant documents.

• Form MGT-7: File the annual return (which includes details about the AGM and financial statements) with the Registrar of Companies (RoC) using Form MGT-7.

- Deadline: Within 60 days of the AGM.

Additional Compliance

-?????? CARO (if applicable): Certain private companies may need to comply with the Companies (Auditor's Report) Order, 2020 (CARO).

-?????? CSR (if applicable): If the company falls under the criteria for Corporate Social Responsibility (CSR), ensure compliance with CSR provisions and reporting.

Appointment of Directors

The appointment of directors for a private limited company in India involves several compliance steps under the Companies Act, 2013. Here’s a detailed guide on the compliance requirements:

Minimum and Maximum Number of Directors

-?????? Minimum: A private limited company must have at least two directors.

-?????? Maximum: A company can have a maximum of fifteen directors, which can be increased by passing a special resolution.

Director Identification Number (DIN)

-?????? Requirement: Every individual proposed to be appointed as a director must obtain a Director Identification Number (DIN).

-?????? Application: Apply for DIN using Form DIR-3, providing necessary documents such as proof of identity and address.

Director KYC: - Forms and Filing

-?????? Form DIR-3 KYC: This form is used for KYC submission by the directors.

-?????? Web-Based DIR-3 KYC: Directors who have already submitted KYC in previous years can use the web-based KYC for subsequent years.

Digital Signature Certificate (DSC)

-?????? Requirement: Directors must have a Digital Signature Certificate (DSC) to sign electronic documents.

-?????? Application: Obtain DSC from a certified authority.

Consent and Declaration

-?????? ?Consent Form DIR-2: Obtain written consent from the individual to act as a director in Form DIR-2.

-?????? Declaration of Non-Disqualification Form DIR-8: The individual must provide a declaration in Form DIR-8 confirming that they are not disqualified to be appointed as a director under the Companies Act, 2013.

Board Meeting and Resolution

-?????? Convening Board Meeting: Call a Board Meeting to discuss the appointment of the new director.

-?????? Passing Resolution: Pass a Board Resolution approving the appointment of the director.

Filing with the Registrar of Companies (RoC)

Form DIR-12: File Form DIR-12 with the Registrar of Companies (RoC) within 30 days of the appointment.

-?????? Attachments: Include the Board Resolution, consent letter (DIR-2), and declaration (DIR-8).

Disclosure by Director

-?????? Form MBP-1: The newly appointed director must disclose their interest in other entities in Form MBP-1 at the first Board Meeting in which they participate as a director.

-?????? Subsequent Disclosure: This disclosure should be made annually or whenever there is a change in interests.

Intimation to Stock Exchange (if applicable)

-?????? Listed Companies: If the company is listed, notify the stock exchange about the appointment of the director within 24 hours of the decision.

Compliance with Additional Provisions

-?????? Independent Directors: If applicable, ensure compliance with the provisions related to the appointment of independent directors.

-?????? Woman Director: Ensure compliance with the requirement to appoint at least one woman director if the company falls under the criteria specified in the Companies Act, 2013.

Non-Registrar-Related Compliances

Tax Compliances

Income Tax

-?????? Annual Filing: File the Income Tax Return (ITR) by 31st July (non-audit cases) or 31st October (audit cases).

-?????? Tax Audit: Conduct a tax audit if the turnover exceeds ?1 crore (business) or ?50 lakh (profession). File the audit report by 30th September.

Goods and Services Tax (GST)

-??????? GST Registration: Register for GST if the annual turnover exceeds the threshold limit (?20 lakh for services and ?40 lakh for goods, with variations based on the state).

-??????? Monthly/Quarterly Returns: File GSTR-1 (sales return), GSTR-3B (summary return), and GSTR-9 (annual return).

-??????? GST Audit: Conduct a GST audit if the turnover exceeds ?2 crore and file GSTR-9C.

Tax Deducted at Source (TDS)

-?????? TDS Registration: Obtain a TAN (Tax Deduction and Collection Account Number).

-?????? Quarterly Returns: File TDS returns in Form 24Q (salaries), 26Q (non-salaries), and 27Q (payments to non-residents).

-?????? TDS Payment: Deposit TDS by the 7th of the following month.

Labor Law Compliances

Employees' Provident Fund (EPF)

-??????? EPF Registration: Register with the EPFO if the company employs 20 or more employees.

-??????? Monthly Returns: File EPF returns and make monthly contributions by the 15th of the following month.

Employees' State Insurance (ESI)

-??????? ESI Registration: Register with the ESIC if the company employs 10 or more employees (threshold varies by state).

-??????? Monthly Returns: File ESI returns and make monthly contributions by the 15th of the following month.

Professional Tax

-??????? Registration: Register for Professional Tax with the respective state authorities.

-??????? Monthly/Annual Returns: File returns and pay Professional Tax as per the state's regulations.

Other Compliances

Secretarial Standards

-??????? Board Meetings: Hold Board Meetings as per Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).

-??????? Minutes and Records: Maintain proper records and minutes of Board and General Meetings.

Corporate Social Responsibility (CSR)

-??????? CSR Policy: Formulate a CSR policy if the company meets the criteria specified under Section 135 of the Companies Act, 2013.

-??????? CSR Committee: Constitute a CSR Committee and ensure the spending of at least 2% of the average net profits on CSR activities.

-??????? Annual Reporting: Report CSR activities in the Board’s Report and file related forms.

Foreign Exchange Management Act (FEMA) Compliances

-??????? FDI Compliance: Adhere to regulations for Foreign Direct Investment (FDI) if applicable.

-??????? Filing with RBI: File annual returns on Foreign Liabilities and Assets (FLA) with the Reserve Bank of India (RBI) by 15th July.

Annual Maintenance

-?????? Annual General Meeting (AGM): Hold the AGM within six months from the end of the financial year.

-?????? Financial Statements: Prepare and get the financial statements audited, and present them in the AGM.

-?????? Director’s Report: Prepare and present the Director’s Report , ensuring compliance with all applicable laws.

Industry-Specific Compliances

-?????? Sectoral Regulations: Comply with industry-specific regulations and standards, such as environmental regulations, food safety standards, and telecom regulations.

Compliance is vital for a private limited company to ensure legal standing, operational efficiency, and long-term success. It helps in building a reputable, trustworthy, and sustainable business that can attract investment, talent, and customers while minimizing risks and avoiding legal issues. Regular compliance is not just a regulatory requirement but a strategic approach to business management and growth.