ANNUAL COMPLIANCE FOR PRIVATE LIMITED COMPANY

INTRODUCTION

For a Private Limited Company, annual compliance is essential. Private Limited Companies in India, widely known as MCA, govern them under the Companies Act, 2013, under the Ministry of Corporate Affairs. According to MCA, every private limited company is under the duty to execute compulsory secretarial compliance filings or ROC compliance within the fixed due date to avoid penalties.
A small group of people holds a Private Limited Company as a business entity. Section 2(68) of the Act defines a Private Company as a business entity owned by a group of members, known as shareholders, and registered for predefined purposes.

WHEN PRIVATE COMPANY LOOSES ITS IDENTITY AS PRIVATE LIMITED COMPANY

Regarding annual compliance for a Private Limited Company, it’s worth noting that a private company restricts share transfers by imposing certain conditions. If its member exceeds 200, it stops to be a private company. It acquires the banning to invite the public at large to subscribe to any securities. Non- appearance of any of these conditions, the company loses its identity as a Private Company.

THE IMPORTANT FEATURES OF PRIVATE LIMITED COMPANY

  • No need of minimum capital.
  • It accepts the deposits from the members without any responsibility and creation of deposits reserve etc.
  • No need of filing the Board Resolutions (MGT-I4) with the ROC.
  • The loan provided to the directors under section 185 with terms and conditions.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

THERE ARE FEW ANNUAL COMPLIANCES OF THE PRIVATE LIMITED COMPANY

1- APPOINTMENT OF AUDITOR

Appointing an auditor is a compulsory, As per the Company Act 2013, it mentioned about the appointment of an auditor for the public or private limited company within one month after the incorporation of the company. The appointment of the auditor is for a duration of 5 years.

2- STATUTORY AUDIT OF FINANCIAL STATEMENT

A private limited company is compulsory to maintain its account in each financial year by the auditor. The auditor prepares the report on financial statements, which is necessary for filing with the ROC.

3- ANNUAL RETURNS

As per the Company Act, 2013, under section 92 Annual Return of a private company certified by a Company Secretary. Every incorporated registered limited company must file its annual return using form MGT 7 within 60 days of the annual general meeting. The calculation of the annual return is based on the financial year, which spans from April 1st to March 31st.

4- FILING OF FINANCIAL STATEMENT

Every private limited company must file the statement of the profit and loss account, balance sheets, and the director’s report, within 30 days of conducting the annual general meeting, with the ROC using form AOC – 4.

5- HOLDING OF AGM

Holding an annual general meeting in every financial year is crucial. It should take place every 6 months from the date of closing the financial year. Additionally, it’s important to ensure that the annual general meeting does not coincide with public holidays.

6- MEETING OF BOARD OF DIRECTORS

The annual general meetings play a crucial role, and the same importance applies to all board meetings held throughout the year for any private limited company. The first board meeting for all private limited companies must take place within 30 days from the date of incorporation. Every year, a private limited company should hold a minimum of four board meetings, with no more than 120 days between each meeting. However, small start-ups of private limited companies receive an exception: they can hold a minimum of two board meetings. It’s crucial to send a notice for the board meeting to each director of your private limited company at least 7 days before the meeting date.

7- DIRECTORS REPORT

According to the Company Act 2013, it mandates the preparation of a director’s report to include all the required information as specified under section- 134. The directors are responsible for providing written details about all directorships held in other companies each year, and they must do so in the prescribed format.

KEY COMPONENTS OF ANNUAL COMPLIANCES OF A PRIVATE LIMITED COMPANY


A company operates as a separate legal corporate entity and adheres to legal rules. Procedures given under the Companies Act 2013. ROC, which is also known as the Registrar of Companies under the Ministry of Corporate Affairs (MCA), plays a pivotal role in regulating and overseeing corporate entities in the country. Every private limited company, no matter what its size, has to file returns and documents to obey all the legal obligations given in the Act.

1- Appointment of Auditor

An auditor’s appointment will be for a duration of 5 years. The auditor shall give an audit report for the purpose of filing it with the registrar.

2- Director’s Report

A report will be ready under section 134, which mentions all the information as per the director’s instructions.

3- Filing of DIR-1

As per Section 164(2) of the Company Act 2013, Every Director of the Company in each Financial Year will file with the Company declaration and non-disqualification.

4- Filing of MBP-1

As per section 184(1) of the Company Act 2013, every director of the company in the annual meeting will disclose his interest in other entities under this form.

5- Filing of MGT-7

As per Section 92 of the Company Act 2013, Every Company will file its E-form, also known as Annual Return, within 60 days of holding the MGT-7 Annual General Meeting. 

6- Filing of AOC-4

As per Section 137 of the Companies Act, 2013, Every Company is required to file its Balance Sheet along with a statement of Profit and Loss Account and Director Report in this form.

7- Statutory Audit Compliances

The motive of a statutory audit is similar to any other audit – to control an organization is providing correct presentation of its financial position by inspecting information like bank balances, bookkeeping records, and financial transactions.

8- Income Tax Compliances

Determining of Payment of Advance Tax: To organizing of Income Tax Returns Tax will be due at 30%. Tax Audit is compulsory sales, as the turnover of a business is more than 1crore. The previous year applicable to the assessment year. To file tax report deposits.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.

BENEFITS OF ANNUAL COMPLIANCE OF PRIVATE LIMITED COMPANY

These are the following benefits:-

  • REPUTATION

By giving the requirements of the Registrar of Company and MCA, the private limited company and partners will hike their reputation in the eyes of the public. This process helps in increases its compliance requirements. In this way, more investors would be willing to invest in the Private Limited Company with the duties of the law.

  • COMPLIANCE

The method of filing compliance is doing within a specified period of time, the private limited company would be free from compliance responsibility. By, all things considered, a private limited company can fulfill its objectives.

  • LESS BURDENS

By complying with the requirements of the controlling bodies, the private limited company would face less burden when it comes to compliance duty. If the compliance are not filed by the private limited company, it can be harmful to the growth of the company. The inescapable compliance related to the partners of the private limited company.

PROCESS OF REGISTRATION OF PRIVATE LIMITED COMPANY

  • DIGITAL SIGNATURE

The directors of a private limited company must have their signatures as they are imperative for the filing of private limited company registration, ROC compliance, and income tax returns.

  • DIRECTORS IDENTIFICATION NUMBER

It takes one day to get it after the digital signature.

  • NAME SEARCH-TM

After DIN, the next step would be setting up for the search of trademark names.

  • FINAL INCORPORATION OF THE PRIVATE LIMITED COMPANY

The final step of incorporating a private limited company, the procedures are done with the approval of the name by the Registrar of Company. It’s time to file an e-form along with the list of documents. This process takes around 3 working days, and a private limited company will be incorporated.

ADVANTAGES OF PRIVATE LIMITED COMPANY

  • NO MINIMUM CAPITAL

The requirement of capital is minimum to start a private limited company. It can be started with the minimum investment of 10,000 share capital.

  • LIMITED LIABILITY

If a company suffered a financial loss, then the personal assets of the members of the company are not used to pay the financial debts of the company.

  • FUNDRAISING

The private limited companies in India is the only form of business except for the public limited company that can raise funds from the venture capitalists.

  • FDI ALLOWED

The private limited company can raise funds from FDI, meaning foreign investors can directly invest in private limited companies.

DISADVANTAGES OF PRIVATE LIMITED COMPANY

  • It controls the transferability of shares by its articles. The number of shareholders, in any case, cannot exceed 50.
  • It cannot issue prospectus to the public.
  • In stock, exchange shares cannot be quoted.

CONCLUSION

As we know, a Private Limited Company is a separate legal entity with perpetual succession, and a private limited company has the ability to share transfer easily. The formation of private limited is done at a minimum investment of share capital.

For more information, please contact us on info@trijuris.com or call us Mb. No. 85100 58386 or 9310 717274.