Generally, people opt for private limited companies due to less formality. It is the most popular and well-known form of start-up. However, some of the mandatory compliances which are pre-requisites are needed to be followed every year.
Dealing with the everyday tasks of business alongside complying the corporate laws can be troublesome for any business person. Subsequently, it is very important to take help of an expert or professional and furthermore see such lawful prerequisites to guarantee the fulfilment of compliances. Any deviation from such compliances will attract penalty or punishment.
The following are the mandatory compliances for private limited companies:
- Appointment of Auditor
A person designated as Auditor must be appointed. He should be appointed for five years and form ADT-1 will have to file for five year appointed. The first Auditor has to be appointed within one month of incorporation of company.
- Statutory Audit of Accounts
All the companies have to prepare its Accounts and it must be audited by a Chartered Accountant at the end of every financial year. The Audit report and the financial statement of the company shall be provided by the Auditor and the same will be filed with the registrar. Audit of accounts is mandatory in order to determine the fair representation of company’s finance. While auditing the auditor examines bank balances and other financial transactions.
- Filing of Annual Return
Every company has to file Annual Return for a financial year (1st April to 31st March). The return must be filled within 60 days of conduction of Annual General Meeting. This discloses the details of its shareholders, directors etc. to the registrar of companies.
- Filling of financial statements
Every private company is required to file its balance sheet containing declaration of profit and loss account and also report from director’s desk. This report has to be submitted within 30 days of holding of Annual General Report.
- Holding Annual General Meeting
Companies are required to hold Annual General Meeting every year. The meeting must be scheduled within a period of six months from the date of end of every financial year. It is the yearly meeting of members or shareholders. In this meeting a company presents reports regarding the performance of the company and further actions. In this meeting voting for appointment of share holders are also done.
- Preparation of Directors Report
A duty has been imposed in the director to furnish all the details required under section 134 of Companies Act, 2013. Every director is obligated to disclose about his directorship by giving a declaration in writing in the specified format.
- Board Meetings
The meeting of board of directors are commonly known as board meetings. It must be conducted within 30 days of Incorporation of company and a minimum of 4 board meeting must be conducted every year which means one meeting in every 3 months. The quorum of the meeting is 2 directors or 1/3rd of the total numbers of Board of directors. Further the entire proceedings of the meetings must be recorded as minutes of meetings. Also, the agenda of discussion must be informed by a notice before 7 days from the conduction of meeting.
- Maintenance of Statutory Registers and Records
A Private Limited Company needs to maintain different statutory registers and records as required by the Companies Act, for example, Register of offers, Register of Members, Register of Directors and so forth. Plus, Incorporation archives of the company, Resolutions of the Board meetings, Minutes of the Board Meetings and Annual General Meeting and so on are additionally required to be saved by the Company. Such records are to be kept at the enlisted office of the company and will be open for review to its members within business hours. Additionally, the books of record of each company relating with a period of at least eight financial years ought to be preserved and kept in good order.
Effect of Non- Compliance
If any company doesn’t comply with the rules and regulations of the companies act, in such circumstances company and every director who is in default will be punished with fine for the period for which default proceeds. In case of delay in any filing, at that point extra expenses are required to be paid, which continues expanding as the day of non-compliance increases. It ought to be noticed that a portion of the Annual Filing Forms can likewise be modified but the fees for subsequent modified filing shall be charged considering it to be new filing.