ANNUAL COMPLIANCE FOR PRIVATE LIMITED COMPANY

INTRODUCTION

A Private Limited Companies in India are governed by the Companies Act, 2013under the Ministry of Corporate Affairs, widely known as MCA. 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 Private Limited Company is a business entity held by a small group of people. It is registered for pre-defined objects and owned by a group of members called shareholders. The definition of a Private Company is given under section 2(68) of the Act.

WHEN PRIVATE COMPANY LOOSES ITS IDENTITY AS PRIVATE LIMITED COMPANY

As we know, a private company share transfer is limited by putting some 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

APPOINTMENT OF AUDITOR

Appointing an auditor is a compulsory step taken by the incorporated companies. 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 auditor is appointed for the time period of 5 years.

STATUTORY AUDIT OF FINANCIAL STATEMENT

A private limited company is compulsory to maintain its account in each financial year by the auditor. The report on financial statements ready by the auditor is required for the filing of ROC.

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 is required to file its annual return with the form MGT 7 within the time period of 60 days of annual general meeting. The annual return is calculated in the financial year, meaning 1st April to March 31st.

FILING OF FINANCIAL STATEMENT

The statement of the profit and loss account, balance sheets as well as the account and the obligation of director’s report required to be filed by every private limited company in a time period of 30 days of the conduction of annual general meeting with the ROC in the form AOC – 4.

HOLDING OF AGM

It is important to hold an annual general meeting in every financial year. It should be held at every 6 months from the date of closing of the financial year. It is important to take care of the day of the annual general meeting that must not be held on public holidays.

MEETING OF BOARD OF DIRECTORS

The annual general meetings are crucial. All board meetings held throughout the year are essential too for any private limited company. The 1st board meeting of all private limited companies shall be held within a time frame of 30 days from the date of its incorporation. A minimum of four board meetings are required to be conducted during a year. Also, the time duration between each meeting must not be exceeding the time period of 120 days, where there is an exception when it comes to small start-ups of a private limited company. And this exception is that instead of 4 board meetings, they are allowed to conduct a minimum of 2 board meetings. A notice for the board meeting must be sent to each director of your own private limited company at least 7 days prior to the date of conduction of the meeting.

DIRECTORS REPORT

As per the Company Act 2013, it provided that a director’s report is necessary to prepare for mentioning all the information that’s required under section- 134. The directors are under the responsibility to provide all details about entire directorships which held in other companies each year. This should be done in written and in the prescribed format.

KEY COMPONENTS OF ANNUAL COMPLIANCES OF A PRIVATE LIMITED COMPANY

A company is a separate legal corporate entity and is operated by legal rules and procedures given under the Companies Act 2013. ROC is also known as Registrar of Companies under the Ministry of Corporate Affairs (MCA). 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.

Appointment of Auditor

An auditor will be appointed for 5 years. The auditor shall give an audit report for the purpose of filing it with the registrar.

Director’s Report

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

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.

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.

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. 

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.

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.

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.