Annual Compliances
For Company

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Categories of  Companies:

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 When it comes to a company under the corporate law in India, there are two primary categories of companies and defined as follows-

 

A.  Public Company – A Public Limited Company is explained under Section 2(71) of the Companies Act, 2013. Firstly, a Public Limited Company is a company that offers shares to the general public and has limited liability. Secondly, a Public Limited Company is required to publish its true financial status to its shareholders. It is also provided that a subsidiary company of a public limited company shall also be deemed to be a public company though it continues to function as a private company in its articles.

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B. Private Companies – Section 2(68) of the Companies Act, 2013 provides the definition for private companies. According to which, private companies are those companies whose articles of association expressly mention a restriction for the transferability of shares and prohibit the public at large to subscribe company.

 

 

Types of Annual Compliances: 

 

The applicable compliances of a Company are classified as Mandatory Compliances and Event-Based Compliances, which must be submitted with the ROC in the prescribed manner, along with the fees and within limits set by the Ministry of Corporate Affairs. The Companies Act 1956/2013 prescribes certain compliances that are necessary to be complied with and submitted to the MCA portal at certain times in a year annually.

 

A. Mandatory Annual Compliances for a Company:

The mandatory annual compliance requirements of a Limited Company include the following-

 

1. Annual General Meeting & Board Meetings –  

The shareholders of a Private Limited Company must meet once every year within six months from the date of closing of the financial year. The Annual General Meeting (AGM) is required to be held at the company’s registered office or at some other place within the city, town, or village in which the company’s registered office is situated. The agenda of the AGM can be issues relating to the approval of financial statements, appointment or re-appointment of auditors, declaration of dividends, appointment and remuneration of directors, etc.

 

Further, every company is required to conduct at least four board meetings(BM) every year, and the gap between two meetings should not be more than 120 days as per the provisions of section 173 of the Act 2013, and the important resolutions must be filed with the Registrar.

2. Annual Returns & Financial statements -

The Annual Return and Financial Statements of the Private Limited Company must be filed every financial year mandatorily by every registered company irrespective of its turnover or activities.

The Annual Return details the information about the company’s shareholders, directors, members, etc., and must be filed within 60 days of holding the Annual General Meeting (AGM).

The Financial Statements are different documents relating to the finances of the company and include the Balance Sheet, Statement of Profit and Loss Account, and Director Report. The Financial Statements must be filed within 30 days of holding the Annual General Meeting.

 

 3. Income Tax & GST returns - 

A company must file its income tax return every financial year along with other mandatory compliances like Advance Tax, Professional Tax, TDS, etc. Additionally, when the annual turnover of a company is above the limit of INR 1 Cr, the company is mandatorily required to file its Tax Audit every financial year. Further, where a company is involved in the manufacture of goods or provision of services recognized under the GST Act 2017 and crosses the limit of 20 lakhs in its annual turnover, it must submit GST monthly, quarterly and annual returns.

 

4. Audit Report-

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 Every company will arrange its Accounts and Financial statements, which are to be reviewed by a Chartered Accountant toward the end of the fiscal year mandatorily under the Companies Act 2013. It shall be the duty of the auditor to provide an audit report of the evaluated financial statements providing his remarks and later to submit it with the concerned Registrar of the jurisdiction.

5.  Maintenance of  Registers & Records-

 

A limited company must maintain all its statutory registers ( Minute Book of meetings, Register of directors, Register of shares, etc.) and records in its registered office. Such records must be kept open for inspection at the company’s registered office. The Registers and Records of a company include the Register of shares, Register of Members and Register of Directors, resolutions of the meetings of the Board of Directors, Minutes of the board meetings, and Annual General Meeting.

 

 

 6. Auditor Appointment-

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 Every company registered under the Indian Companies Act, 2013 needs to conduct it's first Annual General Meeting (AGM) and has to appoint an auditor. Such an auditor must be appointed compulsorily by the Board of Directors within 30 days of incorporation, under the provisions of Section 139 of the Act 2013. Whenever such an auditor is appointed, his appointment must be informed to the Registrar of Companies (ROC) in prescribed form and manner within a period of 15 days from the date of such appointment.

 

B. Event-Based Annual Compliance of the Company:

 

 Similarly, there are certain compliances which are needed to be fulfilled only on the happening of a certain condition. In such an occurrence, the company will be required to file its return in the prescribed form and manner in order to inform the Registrar of Companies (ROC) about such an event. These event-based compliances of a Limited Company include:

 

 1.  Providing Loans to other Companies.

 2.  Providing Loans to Directors

 3.  Appointment of Key Managerial Persons (KMP).

 4.  Change in Authorised or Paid-up Capital.

 5. Allotment of new shares or transfer of shares

 6. Opening or closing of a bank account or change in signatories of a Bank account.

 7. Appointment or change of the Statutory Auditors.

 

 

 

Apart from this, there may be other compliances in the case of public companies, including-

 

a)  Return of Deposits;

b) Appointment of Key Managerial Personnel(KMP)

c)  Appointment of CSR  Committee

 d) Director’s Disclosure

e)  Appointment of Cost Auditor.

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Consequences of non-compliance –

 

i. The Company shall be penalized and may undergo further investigation by the MCA and leading to the dissolution of the company and removal of name from the MCA registry.

 ii.  It makes it crucial for new as well as existing companies to be aware of compliances applicable to it.

iii. Directors of a company are considered to be the “brain” of the company bearing the responsibility to take action on behalf of the company and to ensure that the company complies with all applicable rules and regulations.

iv. where a company commits any default,  a Director is deemed to be disqualified, and his/her DIN would become inactive.

v. Additionally, disqualified Directors would also not be allowed to incorporate a new company for a period of five years.

 

 

As you have already read the above process, which requires a lot of compliances to adhere to, No worries, when TAX BARR is with you, our expert team will handle all those compliances for you to give you a peaceful experience.

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