Compliance with regulatory requirements is vital for companies operating in India, irrespective of their categorization—be it a Private Limited Company, Public Company, or One Person Private Limited Company as per the Companies Act 2013. Fulfilling these obligations outlined by the Ministry of Corporate Affairs is crucial for the well-being of the company.
In this comprehensive guide, we delve into the significance of compliance for private companies, outlining its benefits, necessary documents, and the repercussions of non-compliance.
A private company, owned and formed by private individuals, is not directly controlled by the government. However, Private Limited Companies must fulfill compliance requirements with the Ministry of Corporate Affairs to avoid penalties. Understanding what ROC (Registrar of Companies) filing entails, its process, and compliance prerequisites is pivotal.
Filing compliance for private companies is overseen by the Registrar of Companies (ROC) operating within the Ministry of Corporate Affairs, entrusted with managing all activities under the Companies Act 2013. Companies incorporated under this act are obligated to document their annual compliance with the ROC.
Benefits of adhering to ROC annual compliances:
- Avoidance of penalties imposed by the Ministry of Corporate Affairs (MCA) by maintaining proper compliance with ROC.
- Non-compliance can deter potential investors from funding your company.
- Fosters customer trust and confidence by meeting government requirements.
- Non-filing of essential documents with the Ministry of Corporate Affairs (MCA) might lead to disruptions in business operations by the government.
- Enhances credibility with investors, stakeholders, etc.
Mandatory Documents Required for Compliance:
- Memorandum of Association (MOA) and Articles of Association (AOA).
- Certificate of Incorporation (COI).
- Digital signatures of all directors.
- Company bank statements for the entire year.
- Consent from directors and members.
Compliance Checklist:
- Conducting board meetings within 30 days of registration, with at least 1/3rd of the directors or a minimum of 2 directors present.
- Appointment of auditors within 30 days of incorporation by filing an e-form ADT-1.
- Filing INC-20A for business commencement within 180 days of registration.
- Preparation of financial statements, including balance sheets, profit or loss accounts, etc., for MCA updates.
- Filing income tax returns annually.
- Conducting annual general meetings before September 30th each year.
- Filing MGT-7 for annual returns within 60 days from the annual meeting date.
- Filing AOC-4 within 30 days of the meeting, including balance sheets, profit or loss accounts, audit reports, etc.
- Maintaining statutory registers in the prescribed format.
- Filing MSME-1 e-form in case of outstanding payment dues to vendors beyond 45 days.
- Verifying Form DIR-3 KYC by directors through mobile numbers and email addresses, updating changes if any by filing DIR-3 KYC.
- Informing MCA about deposit receipts or outstanding payments by filing DPT-3.
- Certification by a company secretary for companies with a turnover of ₹50 crores or ₹10 crores of paid-up capital or more, filed in form MGT-7.
Monthly and Annual Requirements for Filing:
- Monthly or quarterly GST Returns (if registered under Goods and Services Tax).
- Monthly TDS payments, quarterly ESI and EPF returns.
- Preparation of financial statements according to Companies Act 2013.
- Conducting the annual general meeting of a Private Limited Company.
- Filing Income Tax returns.
- Filing Form MGT-7 for the company’s annual return.
- Filing Form AOC-4 for financial statements and other company documents.
- Filing Income Tax returns for directors.
- Providing audit reports certified by a Chartered Accountant.
Consequences for Non-Compliance of Private Limited Companies: Non-compliance by private companies with the Companies Act 2013 can lead to severe consequences:
- Directors’ disqualification from serving as directors in any company for five years.
- Penalties up to ₹50,000 for failing to file Form MGT-7, increasing up to ₹100 per day.
- Penalties for not maintaining financial statements, with charges up to ₹1,000 per day.
- Penalties for not conducting annual general meetings.
- Possible imprisonment or fines for directors not disclosing their interests.
- Penalties for non-compliance with DIR-3 KYC.
Conclusion:
Adhering to annual compliances is not just a legal requirement but also crucial for the sustained operation and credibility of a Private Limited Company in India. Fulfilling these obligations ensures smooth functioning, trust-building among stakeholders, and avoidance of severe penalties or disqualifications. Stay compliant, secure, and reputable within the regulatory framework.
